Cross Border Payments – all you need to know

What are cross-border payments? Also known as international payments, cross-border payments are when a business or customer pays someone in a different country.

Finding the right cross-border payment for your business

If you’re buying or selling products and services abroad, you’ll want the best payment experience so you don’t lose time and money to costly delays and fees. There are a few different types of international payments so here’s a quick guide to the cross-border payments industry to help you find the best fit for your business.

Banks

Cross-border payments wire transfers by bank can be slow and expensive. Yes you have the convenience of online banking, but banks usually charge a fee, which will really add up if you’re making regular international payments. You can experience cash flow delays too, with cross-border money transfers taking up to 5 days.

Foreign exchange services

Compared to banks foreign exchange specialists are usually the faster option and are likely to be better value if transferring large amounts. Foreign exchange platforms, like WorldFirst, can offer same-day payment services and according to the Money Advice Service, are the best option for payments over £3,000.

Credit or debit card

Making international payments with a credit or debit card will usually incur a fee. Credit card fees are often higher than for bank transfers or debit cards, but there’s the added benefit you can query the transaction and charge it back to the seller if there’s an issue.

Payment processing services

Payment service providers (PSPs) play a key part in the payment ecosystem and enable you to receive cross-border payments via debit or credit cards and Direct Debit. PSPs manage the end-to-end payment process and are a way to accept as many types of payment as possible so you can broaden your customer base. Some of the most popular PSPs are PayPal, Shopify, Stripe and iZettle.

Receiving cross-border payments

If you’re selling products and services internationally then it’s essential your customers have a quick and secure way to pay. For a healthy bottom line, you’ll want a cross-border payment process flow that’s fast and reliable, and fits the needs of your business.

B2B payments

If you’re mainly dealing with B2B cross-border payments then your business customers may be happy to make payments straight into your business bank account. Whilst they can do this from their bank, it’s usually faster to use a foreign exchange platform like WorldFirst. With a WorldFirst World Account you can open local currency accounts which make it easier to be paid.

To receive a cross-border payments wire transfer like this, when invoicing customers you’ll need to provide:

To receive a cross-border payments wire transfer like this, when invoicing customers you’ll need to provide:

●       Your or your company’s name and address

●       Your bank’s name and address

●       Swift code or Bank Identifier Code (BIC) – see what is a Swift code?

●       International Bank Account Number (IBAN) or account number

Banks can charge an incoming fee for money from an overseas bank account so it’s worth factoring in this cost when deciding how you want to be paid.

eCommerce payments

If you run an eCommerce business, then getting your cross-border payments right is an integral part of offering good international customer service. It’s also important you check the cross-border payment regulations for the countries you operate in to make sure you’re meeting all regulatory compliance around personal data and customer security.

For B2C cross-border payments the process for taking payments will be similar to domestic payments from the customers’ point of view, especially if you’ve integrated displaying costs in the local currency so there are no surprises at the checkout.

If your customers are paying in their local currency, then receiving cross-border money transfers straight into a central business bank account will incur fees. A work around is to have local bank accounts for each currency, but this can be time consuming to set up and manage. A good alternative is a foreign exchange platform like the   through one platform. WorldFirst also partners with major marketplaces and e-commerce service providers, making it a cost-effective and convenient option when selling internationally on platforms like Amazon, eBay and Etsy.

Making cross-border payments

When making cross-border payments you’ll want to weigh up the cost of any fees against the foreign exchange rate to decide if paying by bank transfer, foreign exchange service or card is your most cost-effective option. Sometimes a provider will look appealing because they offer no-fee payments, but then offer a poor exchange rate for the cross-border payment volume you need. For a high-value purchase it’s worth checking real-time exchange rates for a few providers to make sure you won’t be losing a significant amount of money during the transaction.

If you’re paying an overseas supplier for products and services and they’re charging you in your local currency, then you won’t need to pay any foreign exchange fees. The process should be similar to buying domestic products and services especially if you’re buying online through a platform like eBay.

It’s always worth checking the suppliers cost in the supplier’s home currency to determine if there would be discount. Find out how WorldFirst make it easier and faster to send foreign payments and enter new markets with a World Account .

Simplify your cross-border transactions with a World Account

If you’re an SME or online seller receiving international funds and making same-currency and cross-currency payment, World Account can make it faster and easier.

• Speed up your supply chain with faster same-currency and cross-currency payments
• Make same-day payments to more currencies with our later cut-off time
• Send USD and HK payments to any currency account based in Hong Kong to release your shipments sooner
• Set-up payees (beneficiaries) with ease with our simple interface

By opening a World Account, it will be possible to hold international in-country currency accounts to receive local payments, such as those from online marketplaces for B2C sales or perhaps the proceeds of wholesale B2B operations and hold the funds in the corresponding currency in the accounts. Retailers can then make payments to local beneficiaries, such as suppliers, in the same currency out of account balances, reducing FX costs for the payer and increasing the likelihood of the payee receiving payment on time. Alternatively, they could convert some or all of the balance into other currencies to pay other international beneficiaries or transfer the remaining balance back to their home bank account. This ground-breaking flexibility allows SMEs to start scaling their business internationally and removes the barriers that would otherwise add complexity to overseas trade.