Five Ways to Save on Cross-Border Payments

The world is moving fast, and companies are looking to expand beyond their local markets. The international expansion of a business requires a lot of planning. One of the most critical factors to consider is the processing of cross-border payments.

Payments between countries can be subject to several fees. These include currency exchange rate markups, conversion fees, and transfer fees. While you might not be able to avoid these costs, there are several ways to minimize them.

This article discusses five ways to save on cross-border payments:

1. Get Virtual Cards

Virtual cards are excellent solutions for people who regularly make small cross-border payments. The difference between a physical card and a virtual card is that the former connects to your actual bank account, while the latter links to a prepaid account.

When it comes to sending money abroad, virtual credit cards for business are advantageous in converting money at the interbank rate without added markup. This means that they are less likely to carry additional cost than traditional means of making cross-border payments.

Virtual cards are ideal for low-value payments, because they eliminate the need for a bank transfer and give you complete control over your spending. In addition, there are very few fees involved with using them. This makes them affordable options for low-value transactions.

2. Use Cryptocurrencies

Cryptocurrencies are great alternatives to fiat currencies, because they offer lower fees for international payments. However, before using cryptocurrencies for transferring money abroad, consider things, such as the volatility and legality issues in some countries.

Cryptocurrencies like Bitcoin and Ethereum are becoming increasingly popular as cross-border payment methods, because they are cheaper than traditional ones. When you transfer money via conventional means, you pay for conversion fees, wire fees, and other charges in addition to the exchange rate markup. With cryptocurrencies, you pay a fixed fee for transacting huge amounts. However, you still need to convert your currency into cryptocurrency via an exchange platform before paying with it at an online store or via another person directly.

3. Use a Multicurrency Account

If you run a small business and break into the international market, it is advisable to open a multicurrency account. When your customers pay in foreign currencies, hold on to those funds in their respective currencies. That avoids converting them back into your home currency at potentially unfavorable exchange rates — incurring a conversion fee.

This means you have access to your money in different countries and do not need to convert it until you spend it. That way, you avoid losing out on exchange rates every time you get paid in a foreign currency. In addition, it is more convenient for your business as holding different currencies spread the risk of one currency losing value in tough economic times.

4. Get an International Debit Card

If you often travel for work or if your clients are from various parts of the world, then getting an international debit card helps you save on cross-border payments. Most banks offer debit cards that work worldwide, so you withdraw cash free in most countries and bypass extra fees and markups when spending abroad. In addition, when it is time to send money home or back to your business’s bank account, you do so online or over the phone at little to no cost.

A single international debit card saves you money on cross-border payments by consolidating all of your bank accounts into one. With an international debit card, you get one account that holds balances in multiple currencies so that you send money or make payments in any currency around the world.

5. Compare Exchange Rates

It is tempting to use your bank or credit card company when making international payments. However, this is not always the best choice. While they are convenient and offer a measure of security, they also charge high fees and offer poor exchange rates. As a result, you incur much more than you should in your cross-border payment.

To get better value when making cross-border remittances, consider comparing different exchange rates from online money transfer providers (OMTP) like those of traditional banks. OMTPs offer better exchange rates, saving costs for both you and the recipient of your funds. However, do not stop comparing traditional banks and OMTPs, but also compare different OMTPs. Then use the one with the most favorable rates.

Conclusion

With businesses expanding internationally, it is now common to make cross-border payments. However, these payments cost a lot, and your business can lose money when completing multiple transactions. Fortunately, there are different ways businesses use to save on cross-border payments, as discussed in this article. Remember, every cent saved is important in any business.