For decades, sending payments overseas required and long and tedious wire process set up by your bank, and they didn’t do it for free. Along with wires taking days up to weeks to be sent to your supplier’s accounts the fees banks charge can be outrageous and a definite hit to profitability, especially if you’re a smaller to midsize ecommerce company.
Bank wires haven’t evolved to deal with modern international business issues. Many ecommerce companies we’ve worked with require immediate turnaround in today’s world of on demand production, waiting weeks to confirm payment delivery just isn’t an option.
While bank wires are still commonly used in B2B transfers, many companies have started looking for other solutions to their cross-border payment needs.
International Payments vs. Traditional Bank Wires
In recent years we’ve seen a rise in international payment solutions including bank-to-bank transfers, transactional FX and global payment accounts. These new solutions provide many benefits ranging from increased security to significantly faster payment verification and much more. We’ve listed some of the more exciting benefits below.
Real-Time FX Rates
Currency exchange rates change constantly throughout the day, when transferring money through a traditional wire you may actually be short on your payment once the money arrives in the supplier’s account. Not to mention, if you don’t convert the currency on your end you’ll end up paying a large premium if the bank converts it for you often costing you 5-10% of the payment amount.
This isn’t an issue with modern solutions, with real-time FX rates, almost instant transfer times and automatic conversion you’ll end up sending just the right amount in foreign currency which often leads to a better exchange rate in your favor.
Almost Instant Transfers
Bank wires can take anywhere from 1-2 days domestically to over a week internationally and even longer before the funds are actually available for use. With modern solutions building their own payment networks it’s now possible to send money across the world in less than a day with funds being available almost immediately.
True Business to Business
Bank wires often require multiple intermediary banks to complete a transaction, this is part of the reason why it takes so long before the money actually reaches your supplier account.
While transfer time is a major issue, there’s also the risk of missing payments if any of the banks in the chain of the transaction make a mistake. It happens more often than it should and payments can end up missing for multiple weeks before a bank figures out where the issue was made. This can be detrimental to many ecommerce businesses that rely on seasonal stock or on-demand production.
Many of today’s cross-border payment solutions allow you to send money directly from your account to your supplier’s without requiring multiple middleman to complete a transaction.
No Hidden Fees
We’ve mentioned how bank wires require an upfront fee and often charge a premium on exchange rates, but what many business owners don’t see are the additional flat fees taken by up to 3 additional intermediary banks and the recipient transfer fees paid by your supplier.
This cost is typically baked into the invoice the supplier provides you for your goods, unfortunately it’s often overlooked and hard to calculate what the actual cost is on your end.
Many modern payment solutions are completely transparent, and as we mentioned, since they don’t require intermediary banks you and your supplier know the exact costs before the transfer is even initiated.
A New Solution
International payments has been one of the most common issues our customers run into when they start sending payments overseas to their suppliers. It’s usually a bit of a shock when they see the fees they are required to pay, especially when their banks only mentioned the upfront costs.
At Sourcify we’ve put together a solution that allows our customers and other ecommerce businesses to pay overseas suppliers transparently and quickly without outrageous fees. Sourcify Payments is the latest solution to the B2B cross border payment issue many businesses face in today’s world of globalization.
Click here to start sending payments overseas with Sourcify Payments.