How much money could you save with by finding the right international payment service?
It’s hard to believe that traditional contract exchanges are still the default option when it comes to the Forex industry as a whole.
With all of the choices that are on the market today, it’s important to take your time and choose one that can save you money in the long run. If you make regular transactions you’ll know that even the smallest transfer fees can eventually start to add up.
So it’s important to keep this in mind, especially if you own a business in the United States and plan to work with people and businesses around the globe.
Some professionals started out using one type of international payment platform and grown their businesses into full-blown Forex operations. Even if you just want to be able to run your existing business without the complications of a multi-currency account, though, you should still take a look at these kinds of services.
How to use international payment services
Assume that you were working with a client that imports consumer products from China and sells them in the United States. Without managing your currency exposure, you might end up buying it right at the spot rate and have to pay much more than you’d expect for the products your contact was importing. This would be on top of any service fees or even tariffs that you’d be charged for doing so.
A better option would be to use a business payments and FX service that offers a combined package. This kind of organization would give you the option to look through several different banks or dedicated foreign exchange entities so that you could have the best potential rate at any given time.
Exchange rates are adjusted throughout every trading day. That means that your chances of getting a better rate might be somewhat uneven, so you’ll want to work with a service that will perform these exchanges at the most appropriate point in time.
In general, using the service itself should be as easy as doing conventional online banking. It’s important to check to make sure that any organization you work with is licensed and available on a global basis, though. You don’t want to lose out on access to a particular platform simply because it’s not offered in one of your regions of interest.
As you might imagine, many of these services have their own branded apps as well as dedicated web portals. That being said, you shouldn’t be swayed by slick advertising. Pick a platform that’s going to save you the most money.
Saving money with an international payments service
Boutique currency services are service oriented and, as a result, they need your organization to work with them. They’re often willing to offer the tightest spreads around and they can therefore save you the most money.
Some of these might seem too good to be true, though they often really do offer such generous spreads simply because they need the business that badly. A few boutique operations have weathered inflationary periods, though huge changes fluctuations in currencies can severely impact their businesses.
As they generally have fewer corporate clients, these services usually can’t offer a massive global reach. A majority of those that deal with the London exchanges won’t accept US-based clients, which can cause problems for women who run North American businesses.
If you’re planning on going with a smaller business FX provider, then be prepared to ask a few questions. Doing so can save you a ton of money in the long-run.
That being said, even working with a massive firm that provides every service imaginable can translate into a fairly heavy savings if you’ve been buying goods with foreign currency traded purely at market prices. These could be much higher than you ever imagined.
The cost of currency exchange
Using something like Xe will certainly net you savings over using whatever the typical credit card-based currency conversion system your business might rely on at the moment. Typical foreign transaction fees are anywhere from 1-3%, which could translate into a significant amount of money if you’re importing large amounts of goods from any sort of foreign entity.
Many debit or credit providers will charge you 1% of the purchase price in order to cover the cost of a foreign exchange spread and another 2-3% on top of this to deal with the foreign transaction. If you were to buy currency from a business FX service, then you wouldn’t have to worry about either of these costs. You’d probably be buying currency in bulk, which would help to cut down on further costs.
Regardless of what type of organization you decide to work with, make sure that they provide an international business-to-business payment service. These B2B plans are the surest way to get the best price whenever you have to send money back and forth between national boundaries.