The Ultimate Guide to Online Cross-Border Money Transfers for Your Business

According to Statista, the value of online international transactions in 2019 is £65,707 million. And it's expected to increase by 15%, to reach a value of £118,527 million by 2023. What's more, the number of users performing international digital remittances is expected to stand at 13.2 million by 2023. Moreover, the US recorded the highest value of online international transactions, respectively £14,816 million in 2019, followed by Switzerland, Saudi Arabia, Germany, and China.

In order to choose the best providers online to operate your international money transfer, follow our guide.

What Is A Digital Remittance Service Provider?

Globalization has opened doors for high potential business opportunities and digitization is streamlining the process. Together they’ve created various industry segments such as digital remittance. It’s a business sector, which promotes efficient and rapid cross-border transactions on global platforms.

A digital remittance provider is a company which facilitates both domestic and international money transfers for individuals and businesses. But if you don’t use the right tools and the proper service provider for your business’ cross-border transfers, these international transactions can become significant liabilities.

Choosing A Digital Remittance Provider

Transfer fees and currency exchange rates affect how much your business will pay for international transactions. But you should also consider the time it takes for the money to reach the beneficiary. Most cross-border transfer providers leverage exchange rates for a profit. Your best approach is to search for a provider, which applies mid-market rates or the interbank rate.

Because transfer fees are different, you should know the exact amount to be covered whenever you make an international transfer. Fees change depending on the beneficiary’s account, the transfer channel and amount of money you’re looking to transfer. Also, if your business regularly requires urgent transfers, you should confirm that your provider has an expedited transfer option. Additionally, check the currencies supported by the transfer company. Customer support is another crucial factor in case you face difficulties with any international transfer.

Why Go Beyond Your Bank for International Transfers?

Business owners often value time more than money. And you may consider your local bank the most reliable way to perform cross-border transfers, just because it deals with the rest of your financial requirements. The truth is, cross-border transactions execution is not exclusively limited to traditional players such as banks. Digital companies and fintech solutions are emerging and they’re highly competitive, aiming to earn your business’ accounts.

Banks provide a wide variety of financial services and products, therefore they offer very weak exchange rates and high fees. Your business can incur up to £53 per cross-border transaction. In the end, you’ll lose a significant amount of the transfer you’re making. However, because online international money transfer providers exclusively specialize in cross-border transactions, they can offer competitive exchange rates and minimum transfer fees. That’s thanks to the high currency volumes they handle. So, here’s three of the top players in the international digital remittance landscape including MoneyGram, Western Union, and PayPal.

MoneyGram

MoneyGram is one of the first players in the international transfer business segment, developed in 1940 in Dallas, Texas. The traditional way of sending transfers through MoneyGram involves a sender, a MoneyGram Store, a MoneyGram network and picking up cash by the receiver from the nearest MoneyGram kiosk. So, MoneyGram is a 3rd party intermediary, which applies a fee for facilitating the international transfer.

Although its principal business model is enabling in-person transfers, MoneyGram has also developed online international transfer facilities. You must fill in a form online, which includes your business’ details and the amount you’re looking to transfer. Payments can be made through Visa and Mastercard debit or credit cards.

And if you make an international transfer through a credit card, your bank will consider the transaction to be a cash advance. To verify the information and confirm your business’ identity and your authorization to make payments, MoneyGram will use 3rd party sources or contact you directly by phone.

Western Union

Western Union is a famous international transfer provider with a legacy dating to the 19th century. Thanks to the evolution of technology, Western Union provides cross-border transfers online, in person or by phone through thousands of partners worldwide. And the beneficiary can choose to pick up cash or receive the money into a bank account or mobile wallet.

But remember to check the fees for international money transfers. Fees differ depending on how your business makes the transfer and how the beneficiary receives the money. You also must consider the exchange rate.

What’s more, Western Union admits in its terms and conditions that it charges worse rates than the mid-market exchange rate and keep any difference. Also, they can change the rates without prior notice. So, there’s a risk you must also account for.

PayPal

PayPal is a popular online cross-border payment provider. And to keep costs on the low, it’s better if both you and the beneficiary have PayPal accounts. The company processes payments in a wide range of currencies and multiple countries. Setting up a business account with PayPal is a seamless process if you have the required information available.

You should select the type of business account, which suits your business and once it’s approved you can make international transfers. You’ll find a variety of costs linked to different services, so check the merchant page for the main costs. For example, international transfer fees, which include a percentage fee, or a fixed fee, can reach up to 1.5% and 2.5% currency exchange fee.

Fintech Solutions

FinTech enterprises are organizations, which combine technology and innovative business models to facilitate, improve and disrupt the financial sector. And the interaction between traditional banks, challengers, and companies outside the financial sector are creating FinTech ecosystems, which are gradually replacing traditional partnerships. Businesses can enjoy a wide range of Fintech benefits by opening business accounts with major challengers on the market such as TransferWise or XE Money Transfer.

TransferWise

TransferWise offers low-fee, one-off transfers and multi-currency borderless accounts for your international transfers. It’s extended its competitive low fees and rates to serve businesses with a wide range of services. The user-friendly interface helps businesses perform one-off payments, batch payouts and adjust currencies to settle suppliers’ invoices. Small businesses can receive payments in 3 main currencies, manage up to 28 currencies and make international transfers in over 50 currencies. Transfer speed ranges from 3 to 5 days and the maximum transfer amounts stand at £165,819. What’s more, TransferWise offers mid-market exchange rates. And with some currencies, TransferWise guarantees that a rate will remain the same for a determined period. The standard fee for transfers of over $5,000 to any other currency is 1%. While on transfers of up to $3,000, TransferWise applies a $3 fee.

XE Money Transfer

XE Money Transfer‘s available in over 170 countries and it supports 24/7 international money transfer at competitive rates and no fees. You can transfer up to £414,550 online and lock strong rates on future international transfers. The downside is that only bank-to-bank transfers are available, and you’re required to submit supporting documentation.

The Bottom Line

The international digital remittance sector has entered a pivotal stage. It’s changing how business is done around the world. And because the cost of international online transfers must be reduced, the digital transfer markets are constantly implementing fintech solutions. You’ll find user-friendly interfaces with smart payment systems, which offer low costs and increased transfer speeds. And as cross-border transfer providers partner with mobile development companies, the remittance industry is being disrupted by innovative and challenging international money transfer players.

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