Last editedMar 20233 min read
The advent of globalization has changed commerce forever. At the touch of a button, people from all over the globe can make purchases from countries they’ve never even been to. Whether it’s a housewife from Hong Kong purchasing Peruvian linen or a start-up in Sacramento hiring a firm in Finland to handle their marketing, there’s been an explosion in demand for easy and affordable cross-border payments. So, how do international payments work and why are they so important? Let’s explore everything you need to know about international business payments, right here.
What is an international payment?
In a nutshell, the term “international payments” refers to any type of cross-border transfer of money between accounts. This covers many different types of transactions, including trade, retail, and individual transactions. Most of the time, payments will be made in different currencies, which means that international business payments require some kind of foreign exchange to mediate the transfer. It’s difficult to overstate the importance of international business money transfers. After all, if we didn’t have the infrastructure to support these types of cross-border payments, global commerce and international trade couldn’t exist.
Methods of payment in international business
There are a range of different methods of payment in international business that you may wish to consider. Here’s a rundown of some of the most common methods:
International bank transfer: One of the best methods of payment in international business is an international bank transfer. This is probably the simplest solution for sending bank-to-bank international payments, and while processing times can vary, the fastest bank transfers will be completed within the same day. The downside of this method is the relatively high fees, at least in comparison to other transfer methods.
Online payment gateways: Another great option to consider is an international payment gateway. Options include PayPal, Worldpay, Sage Pay, Braintree, Stripe, Amazon Pay, and so on. If you need to send or receive international payments, these types of payment gateways can be a solid choice. However, each brand will offer its own type of fee structure, currency rate, and suite of features, so it’s important to do your research before choosing a provider.
Specialty Forex brokers: If you’re making a larger international payment, it may be a good idea to make use of a foreign exchange broker. These brokers can offer better rates as they tend to purchase and sell foreign currency in larger volumes. You’ll be able to opt between forward contracts (fixed rate, arranged for future date) and spot contracts (based on agreed exchange rate).
How much does an international business money transfer cost?
International business payment costs vary depending on the provider. There are a range of fees that you may need to account for, including currency exchange fees, cross-border interchange fees, fixed transfer fees, and so on. In addition, international wire transfers can have lots of hidden fees that can cause the overall price to skyrocket. Ultimately, international payment costs are so variable that it’s best to investigate your chosen method of payment in international business yourself in order to determine the cost of the transfer.
How long do international business payments take?
International payments transfer times are generally between one to five business days, depending on the destination country, transaction method, time of day, and degree of verification checks used in the transaction. Furthermore, there can be delays to international business money transfers due to a range of different factors, including weekends/public holidays, outdated local banking infrastructure, or recipient banks using legacy accounting systems. If you’re sending an international business payment in response to a dated invoice, it’s important to pay close attention to how long the payment is likely to take, or you may end up missing the payment due date.
What’s the best way to accept international payments?
As cross-border transactions become an increasingly regular part of business life, particularly for ecommerce companies, it’s become more and more vital to find the best method of paymentininternational business. GoCardless can be a great way to collect international payments. Allowing businesses to receive international payments from 30+ countries at the real local exchange rate by offering local bank debit options, GoCardless enables both customers and merchants to transact within their own currency. Connecting ACH debit schemes across 30 markets, merchants can collect international payments from many countries from one single platform, making it an incredibly convenient option for businesses that deal with lots of international business payments on a day to day basis.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.