Conducting business during the 21st century usually means having to make and receive fund transfers across international borders. As opposed to domestic money transfers, where funds are moved locally, International Money Transfers involve the movement of funds across national borders to the country of the sender’s choice.
As a business owner, it is important that you develop safe and effective methods to send and accept payments internationally, whether you need to pay vendors, receive funds, conduct international payroll, manage liquidity between currency accounts, or handle FX risk.
To accept international payments, you must first learn about the local banking system of your overseas clients and choose a secure payment method you can use to receive payment quickly and securely.
What Is An International Money Transfer?
International Money Transfers are simply international fund transfers between countries. Since these payments cross borders, they involve more than just banks. They connect companies, individuals, banks, settlement institutions, and other entities operating in different countries often involving at least two currencies. The sender will deposit money into an overseas bank account and the recipient can pick up the money at a branch of the bank or retrieve it in cash (known as a ‘cash pick-up’). In addition to making IMTs of small and large amounts, they can also be done on an as-needed basis or as a one-time event, based on your specific needs.
How Can You Receive An International Payment?
Thanks to modern technology, transferring money overseas has never been easier. However, when you are accepting international payments and domestic payments, it is important to select payment solutions that are secure and that don’t charge unreasonable transaction fees. Being careful about which provider you use when transferring money overseas could save you a lot of money.
But in what ways can you accept an international payment?
1. Online Payments
Online payments break geographical restrictions and make transferring funds possible even without physical presence. Service providers such as OpenPayd let you accept international payments online.
Advantages of Online Payments:
User-friendly: Most international online payment services are easy to navigate and require just your basic banking information to process payments.
Quick processing times: Most international online payment services boast fast processing times. You will usually receive the funds within a few days.
Strong security: The use of heavy encryption and security measures when making international payments makes online payments one of the most secure ways to accept money from overseas.
Disadvantages of Online Payments:
Transaction fees: Almost all online payment services charge transaction fees for using their service. While those fees usually range from two to five per cent per transaction, they can add up if you accept international payments frequently.
Limited availability: Online payment services aren’t available in every country, so make sure the provider you’re considering offers its services in the country where your client is based.
2. International Money Order
An international money order is a document that resembles a check. It requires the customer to pay upfront using cash or credit card for a prepaid payment option, so your customer needs to make the payment in advance.
Advantages of International Money Orders:
- Low cost: The costs of purchasing money orders are very low and you will not be charged any processing fees.
- Payment upfront: Because the client pays for the money order upfront, you have the peace of mind that they have the money to cover the invoice amount.
Disadvantages of International Money Orders:
Long processing times: Money orders may take several days to arrive at their destination and your bank may take up to ten days to process them.
Used for Scams: The ease with which money orders are purchased and the difficulty tracing them makes them easy to use in scams. When accepting money orders, be cautious of red flags that could indicate a scam and only accept money orders from clients you know and trust.
3. International Wire Transfer
Wire transfers are a common method of payment overseas. These transfers are electronic transfers made between two banks via a network like SWIFT.
Advantages of Wire Transfers:
Fast processing time: A wire transfer will usually be completed as quickly as possible so that you receive the funds in your bank account almost immediately after the transfer.
Highly secure: Wire transfers are a secure payment method for international transfers since they are conducted directly between two banks.
Disadvantages of Wire Transfers:
Expensive: International wire transfers through banks are subject to high fees, sometimes as much as sixty dollars per transaction.
Not easily traceable: Since wire transfers are hard to trace, it can be difficult to resolve any payment disputes between you and your client.
For a business, maintaining high cash flow is the topmost priority, and this is made possible by capturing the global market. With the wonders of modern technology, you can not only accept money online, but it is usually cheaper than telephone transfers and in-person transfers, as both of these options have higher fees.
Fortunately, fintech startups such as OpenPayd have developed platforms and services to make sending money from one person to another cheaper and quicker. A leading global payments and banking-as-a-service (BaaS) platform for the digital economy, OpenPayd lets you access domestic and international payment rails, and transact across borders with minimum fees and no fuss. Get in touch with our team to learn more.