Author Topic: Top 4 Ways To Make International Payments For Businesses 2023  (Read 523 times)

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The globalisation of markets is one of the most fascinating developments in this era. It’s open the doors for businesses to transact and partner with foreign suppliers, hire foreign talents and target entirely new markets.

But when it comes to payments, cross-border ventures become tricky. You almost need a whole new set of knowledge and skills to navigate between currencies and jurisdictions.

In this article, we’ve broken down the four best international payment methods and put them side by side to help you decide which one best suits your needs.

Banks (e.g. DBS, OCBC, UOB)
Pros:
Banks are arguably the safest choice of all. Typically, banks that have the capability to support overseas transactions are already established and have a significant physical presence. In addition, banks are also the most familiar and well-trodden path. Both of these mean you can expect a smooth journey when it comes to accessing your funds and transacting without worry.

Transacting through banks often comes with the benefit of having a full suite of facilities and features like hedging, trading, and loan. In a fast-paced organisation, this will be beneficial as you don’t need multiple vendors; only one bank for all financial needs.

Cons:
However, using banks for your payment needs may not be in your SME's best interest because the price of transacting with them comes in the form of hefty wire transfer fees.

For instance, when you use a telegraphic transfer from Singapore, you need to pay 1) the upfront transfer fee, 2) the cable charge, 3) the exchange rate markup and 4) third-party fees. Or all of them together. As these fees are per transaction, they can add up real quick and aren’t ideal for businesses.

Not just that, cross-border bank transfers also take an average of three to five working days. This can be a deal-breaker if your business requires a quick settlement of invoices.

Read more: International Bank Transfers: Fees and Charges You Should Be Aware Of

Remittance providers (e.g. Western Union, WorldFirst, AMEX)
Pros:
Remittance options have been the go-to for specialised international payment needs in the past decade. Today, Western Union serves over 200 countries and supports both cash pickups and bank deposits. It’s safe to say that money remittances like Western Union, WorldFirst, and AMEX already have the necessary infrastructure.

For businesses that require specific transaction methods, remittance-focused companies often offer more personalised facilities. These are Forward Contracts, Options, Bulk Payments, and Credit Lines. They permit businesses to have more flexibility in their payment methods.

Cons:
On the flip side of having a wide range of features, it comes at the cost of being counterintuitive. In other words, it can be difficult to understand and navigate through their respective ecosystems, requires a rather manual process, and businesses may have to train their employees in this area.

Similar to banks, remittance methods are generally more costly than other options. Despite its convenience advantage, establishments such as Western Union have an unfavourable foreign exchange rate for senders. Ergo, in an event where SGD (or your local currency) is losing ground against the corresponding currency (the currency you’re making a payment to), it will incur a much higher cost on your behalf.

Banking alternatives (e.g. Volopay, Spenmo, Aspire)
Pros:
In comparison to traditional banking services, FinTech companies such as Volopay, Spenmo, and Aspire offer “all-in-one” products. Like banks, these online payment methods allow businesses to send and receive multiple currencies. But beyond that, they also come with expense and payable management services, such as budgeting, automated bill submissions, and bulk payments.

This option is great for startups as they help delegate and automate finance operations while maintaining the visibility of payment inflows and outflows. Their competitive rates also provide an advantage for companies to stretch their budget.

Cons:
The risk, on the other hand, is the stability of these businesses. Despite their versatile and innovative products, most of these companies have only existed for less than a decade. This puts the sustainability of the business in question — whether the company can weather an economic slump or a recession.

Another limitation of banking alternatives is that they may not allow ATM withdrawals. For online-only businesses, this isn’t an issue. But for businesses that rely on cash and cheques, this may not be the most suitable option.

Payment alternatives (e.g. Wallex)
Pros:
If you’re on the hunt for a more cost-effective, fast, and secure way to make cross-border transactions, consider online payment companies like Wallex. Their 100% online systems allow these platforms to provide speedy international transactions — no more waiting for money to clear and unnecessarily complicated processes.

Speaking of, their services often include a multi-currency business account — a digital wallet — which permits businesses to hedge from currency fluctuations by retaining specific foreign currencies. But, even in the case where you need to exchange currencies, these companies can offer a much better rate — up to 60% cheaper than banks.

Cons:
Like banking alternatives, payment alternatives are also a comparatively new concept that may come with the risk of instability. However, FinTech payment systems have the advantage of constantly innovating. This enables them to build better, faster, and safer products with experience.

Conclusion
While FX rates are a big factor in choosing a payment provider, it’s only one component in the equation. Consider the fees, account servicing, and available transfer options. Making the right international payment solution can help you optimise your business cost in the long run.

At Wallex, each of our clients has a dedicated account manager to assist and advise them in everything and anything payment related. Get in touch with us and let us show you how Wallex can streamline your cross-border payment solutions

Learn more at wallex.asia
or call (021) 2922-2991 (Wallex Call Center for International Supplier/Business Payment)
« Last Edit: May 26, 2023, 10:06:45 AM by wallex »