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In today's global marketplace, B2B cross-border payments have become an integral part of doing business, according to Statista. Whether it's paying suppliers, remote workers, or international consumers, business owners need to send and receive payments across borders regularly. However, the cost of cross-border payments can add up quickly, with fees, exchange rates, and other charges eating into profits.
As a business merchant, it's essential to find ways to save money on cross-border business payments, so you can maximize your returns and stay competitive in the global market. In this article, we'll share with you some top tips and tricks for saving money on cross-border payments, so you can keep more of your hard-earned cash in your business. From using online transfer services to negotiating better exchange rates, we've got you covered. So read on, and learn how to make the most of your cross-border payments solutions, while keeping your business's bottom line healthy.
Saving money on cross-border payments
Saving money on blockchain cross-border payments is essential for businesses, as these payments can quickly add up and eat into profits. For example, let's consider a small business owner in the US who needs to pay a supplier in Europe €10,000 for goods. Their bank offers an exchange rate of 1 USD = 0.82 EUR and charges a $35 wire transfer fee, resulting in a total cost of $12,195.12 (€10,000 / 0.82 + $35).
However, by comparing payment providers, the business owner could save a significant amount of money. Let's say they find an online money transfer service that offers an exchange rate of 1 USD = 0.85 EUR and charges a $10 transfer fee. This would bring their total cost down to $11,825.88 (€10,000 / 0.85 + $10), resulting in a savings of $369.24.
But the savings don't stop there. If the business owner has the flexibility to plan ahead and wait for favorable exchange rates, they could save even more. For example, if they wait a few days and the exchange rate improves to 1 USD = 0.87 EUR, their total cost would be $11,494.25 (€10,000 / 0.87 + $10). That's a savings of over $700 compared to the original bank quote.
As we can see from this example, even small differences in exchange rates and fees can have a significant impact on the cost of cross-border payments. By taking the time to compare payment providers and wait for favorable exchange rates, businesses can save a considerable amount of money, which can contribute to their overall profitability and competitiveness in the global market.
Tips on how to save on Cross-Border Payments
In today's global economy, cross-border real-time payments are a necessity for many businesses. Here are some tips on how to save on cross-border payments:
Understand the Costs of Cross-Border Payments
Before implying any cross-border payments blockchain, it's important to understand the different costs involved. According to a study by Western Union, the average cost of sending $1,000 from the US to Europe is $40.67. These costs may include:
Exchange rate
According to a study by Wise, banks can charge up to 5% more than the mid-market rate for currency conversion. This means that businesses could be losing out on hundreds or even thousands of dollars in unnecessary fees. It's important to keep an eye on exchange rates and make payments when rates are favorable.
Fees
Most payment providers charge fees for cross-border payment regulation, and these can vary widely depending on the provider and the type of payment. According to a study by World Bank, the average fee for a cross-border wire transfer is $25. It's important to compare fees from different providers to ensure that you're getting the best possible deal. Some popular payment providers for cross-border payments include traditional banks like HSBC and Citibank, online money transfer services like TransferWise and PayPal, and payment apps like Venmo and Zelle.
Taxes
When providing cross-border payments market size, it's crucial to consider not only exchange rates and fees but also taxes. Taxes can vary depending on the country and the type of transaction being made. To ensure you're not overpaying on taxes, it's important to research and understands the tax regulations in both your home country and the country to which you're sending money. Working with a tax professional can also be helpful in navigating these complexities.
Other hidden costs
In addition to exchange rates, fees, and taxes, there may be other hidden costs associated with cross-border payments companies. These could include intermediary bank fees, correspondent bank fees, and even fees for using certain payment methods. It's important to read the fine print and ask questions to ensure that you're not being hit with any unexpected costs.
Compare Payment Providers
Traditional banks
When it comes to traditional banks, it's substantial to keep in mind that they often have higher fees and less competitive exchange rates than other payment providers. For example, a study by financial research firm MyBankTracker found that the average cost of sending $1,000 from the US to Europe via a traditional bank was $45. This is significantly higher than the fees charged by many online money transfer services. Wise is a great prospect for transfers under $10,000 and is currently offering an exclusive, first-free transfer offer of up to $1,000 in value. You can check the transfer limits for each currency with their calculator.
In addition, traditional banks may also have longer processing times for international payments, which can be a concern if you need to make time-sensitive transactions. It's also worth noting that some banks may require you to have a business account or meet certain eligibility criteria before you can make CBDC cross-border payments.
That being said, traditional banks can still be a viable option for certain businesses, particularly those that prioritize a strong relationship with their bank and value in-person support. It's worth comparing the costs and benefits of using a traditional bank versus other payment providers to determine the best option for your specific needs.
Online money transfer services
Online money transfer services like TransferWise and PayPal offer competitive rates and low fees for cross-border payments. According to a study by Finder, TransferWise is up to 8 times cheaper than using a traditional bank for international money transfers.
Payment apps
In the modern world payment apps are a relatively new option for cross-border payments, but they are quickly gaining popularity due to their ease of use and low fees. Some popular payment apps for blockchain for cross-border payments include PayPal, Corytech, Wise, and Payoneer.
Another benefit of payment apps is their ability to offer additional services such as multi-currency accounts, currency exchange, and instant payments.
However, it's important to keep in mind that not all payment apps are created equal, and it's important to compare the fees and exchange rates of different providers to find the best option for your business. It's also worth noting that payment apps may have limitations on transaction size or frequency, so it's important to review their policies before making a decision.
Factors to consider when comparing providers
When comparing payment providers, it's important to consider factors like exchange rates, fees, processing times, and security. By taking the time to compare providers, businesses can save significant amounts of money on cross-border payments.
| Factor to Consider | Traditional Banks | Online Money Transfer Services | Payment Apps |
| Exchange Rates | Varies widely, may offer unfavorable rates | Competitive rates, some may have hidden fees | Competitive rates may offer favorable rates for larger transactions |
| Fees | High transfer fees and additional charges | Low transfer fees and minimal additional charges | Low transfer fees and minimal additional charges |
| Processing Time | 1-5 business days for international transfers | 1-3 business days for international transfers | Instant or 1-2 business days for international transfers |
| Security | Generally secure but may be vulnerable to cyber attacks | Highly secure, but some services may be less established | Highly secure, but some services may be less established |
As you can see, each type of payment provider has its own strengths and weaknesses when it comes to factors like exchange rates, fees, processing times, and security. By comparing these factors, businesses can make an informed decision about which provider will best meet their needs and help them save on cross-border payments.
Choose the Best Payment Method
Once you have compared payment providers and selected the one that best fits your needs, it's time to choose the best payment method for your cross-border transaction. Here are some of the most common payment methods and their pros and cons:
Bank transfers
A bank transfer is one of the common types of cross-border payments. This involves transferring funds directly from your bank account to the recipient's account. While bank transfers are generally secure, they can be slow and may incur high fees. Additionally, exchange rates offered by banks may not be as favorable as those offered by other payment providers.
Based on a survey by Wise, when it comes to sending money across borders, banks can charge as much as 5% in fees. For instance, if you use Chase Bank to transfer $500 to Canada, you may have to pay a fee of $25. Similarly, sending $2,000 through Wells Fargo to Asia could result in a fee of $100.
Brand example: Citibank offers international wire transfers for business customers, with fees starting at $25 USD per transfer.
Credit and debit cards
Using a credit or debit card for cross-border payments can be convenient, as many businesses and consumers already have cards that can be used for international transactions.
According to a study by Capgemini, global digital payments are expected to reach $6.7 trillion USD by 2023. Credit and debit cards are a popular method for cross-border payments, with major brands like Visa and Mastercard offering international transactions.
Brand example: American Express offers business credit cards that can be used for international transactions, with features like competitive exchange rates and no foreign transaction fees.
PayPal
PayPal is a popular online payment service that allows users to send and receive money internationally. While PayPal's fees and exchange rates are generally competitive, it's important to be aware of additional costs like currency conversion fees and withdrawal fees.
Additionally, some countries may have restrictions on using PayPal, so it's important to check if PayPal is a viable option for the specific cross-border mobile payment you're making.
According to PayPal's Q4 2021 report, the company processed $277 billion USD in total payment volume, with international payments accounting for 25% of that volume.
Brand example: PayPal Business offers international payments for businesses, with fees starting at 3.9% + fixed fee per transaction.
Cryptocurrency
Cryptocurrencies, such as Bitcoin and Ethereum, is a decentralized digital currency that can be used for cross-border payments. While cryptocurrency can offer fast, secure, and low-cost transactions, it's important to be aware of the risks and volatility associated with the market.
Popular cryptocurrency platforms for cross-border payments include BitPay and Coinbase. When choosing a payment method, it's important to consider the specific transaction and the needs of the recipient. Additionally, be sure to factor in fees, exchange rates, processing times, and security when making your decision.
According to CoinMarketCap, the total market capitalization of cryptocurrencies was over $2.2 trillion USD as of February 2022. Cryptocurrency can offer fast and low-cost cross-border payments, but may not be as widely accepted as other payment methods.
Brand example: BitPay offers businesses the ability to accept and send payments in Bitcoin and other cryptocurrencies, with features like conversion to fiat currency and settlement to a bank account.
Pros and cons of each method
|
Payment Method |
Pros |
Cons |
|
Bank Transfer |
Reliable and secure; no fees for some transactions |
High fees for some transactions; slow processing times |
|
Credit and Debit Cards |
Instant processing; accepted by most merchants |
High transaction fees; foreign transaction fees |
|
PayPal |
Instant processing; buyer protection |
High transaction fees; not accepted by all merchants |
|
Cryptocurrency |
Low transaction fees; fast and secure |
Volatility; not widely accepted |
It's important to note that the pros and cons may vary depending on the specific provider and transaction. It's worth taking the time to research and compare options to find the best payment method for your business needs.
Timing is Everything
When it comes to cross-border payments, timing can play a significant role in saving money. By planning and taking advantage of exchange rate fluctuations, businesses can minimize costs and increase their savings.
For example, let's say a US business needs to pay a supplier in the UK £10,000 for goods. If they make the payment today at an exchange rate of 1 USD = 0.72 GBP, their total cost will be $13,888.89 (£10,000 / 0.72). However, if they wait a few days and the exchange rate improves to 1 USD = 0.75 GBP, their total cost will decrease to $13,333.33 (£10,000 / 0.75).
Plan ahead
Waiting until the last minute to make a payment can limit your options and result in higher fees and poorer exchange rates. By planning and giving yourself plenty of time, you can research and compare payment providers, track exchange rate trends, and choose the best option for your business.
Take advantage of exchange rate fluctuations
Exchange rates can fluctuate rapidly, so it's important to monitor them regularly and take advantage of favorable rates when they occur. For example, if you have the flexibility to wait a few days for a more favorable rate, you could save a significant amount of money on your payment.
Avoid making last-minute payments
Rushing to make a payment at the last minute can result in higher fees and poorer exchange rates. If possible, plan and make payments well in advance of the due date to avoid these added costs.
Negotiate with Providers
Another way to save money on cross-border payments is to negotiate with payment providers. By asking for a better exchange rate, requesting to waive fees, or bundling multiple payments, businesses can potentially lower their costs.
Ask for a better exchange rate
Many payment providers are willing to negotiate exchange rates, particularly if you have a large payment to make. By asking for a better rate, you could save a significant amount of money on your payment.
Request to waive fees
Some payment providers may be willing to waive certain fees or reduce them if you ask. For example, if you make regular payments through a specific provider, you could ask for a fee waiver as a loyal customer.
Bundle multiple payments
If you have multiple payments to make to the same recipient, bundling them together into a single payment can help you save money on fees and exchange rates. Many payment providers offer discounted rates for bulk payments, so it's worth asking if this is an option.
According to a survey conducted by TransferWise, an online money transfer service, businesses can save up to 8 times more by using a specialist money transfer provider instead of their bank for cross-border payments. The survey found that banks charged an average of 3.6% in fees and markups on international transfers, while specialist providers charged an average of just 0.5%. In terms of negotiation, it's worth noting that some payment providers are more open to negotiation than others. For example, TransferWise states that it doesn't negotiate exchange rates or fees, as it aims to offer transparent, low-cost pricing to all customers. However, other providers may be more willing to negotiate depending on the circumstances.
By planning, monitoring exchange rates, and negotiating with payment providers, businesses can save significant amounts of money on cross-border payments.
Corytech’s offering for cross-border payments
Corytech is a payment platform that allows businesses to send and receive cross-border payments using cryptocurrency. It supports popular cryptocurrencies like Bitcoin, Ethereum, and Litecoin, and boasts fast transaction times and lower fees compared to traditional payment methods.
One of the key advantages of using Corytech for cross-border payments is that it eliminates the need for intermediaries like banks, which can be costly and slow. With Corytech, businesses can send and receive payments directly from anywhere in the world, without having to worry about currency conversions or delays.
Corytech also provides businesses with the ability to easily track and manage their payments through a user-friendly dashboard, providing real-time updates on payment status and transaction history. This helps businesses to streamline their payment processes and improve their overall financial management.
Corytech offers an innovative and efficient solution for businesses looking to simplify their cross-border payment processes while reducing costs and improving speed and security.
Cross-Border Payments FAQ
How do cross-border payments work?
Cross-border payments involve transferring money from one country to another. This can be done through various payment methods, such as bank transfers, credit cards, or online payment providers. However, cross-border payments can be complex and expensive due to factors such as exchange rates, fees, taxes, and regulatory compliance.
Why are cross-border payments expensive?
Cross-border payments can be expensive for several reasons, including exchange rate fluctuations, intermediary bank fees, transaction fees, and taxes. In addition, regulatory compliance requirements can add to the cost and time of cross-border transactions.
How blockchain could disrupt cross-border payments?
Blockchain technology has the potential to disrupt cross-border payments by enabling faster, cheaper, and more secure transactions. Blockchain allows for direct peer-to-peer transactions without the need for intermediaries such as banks or payment providers. This can result in lower fees and faster processing times for cross-border payments. Additionally, blockchain technology provides increased transparency and security, reducing the risk of fraud or errors in cross-border transactions.
What’s Next?
Cross-border payments can be a real headache for businesses, costing them a pretty penny in fees and hidden costs. But fear not, because finding a single payment platform to perform international cross-border payments can be a game-changer for any business looking to save on cross-border payments. With the right provider, businesses can take advantage of competitive exchange rates, faster processing times, and transparent fee structures.
Enter Corytech, the innovative payment provider that offers a fully-featured platform for businesses to manage their cross-border payments. With its user-friendly interface, businesses can easily compare exchange rates and fees from multiple providers, and select the best option for their specific needs. And, with the option to pay with cryptocurrency, businesses can further save on fees and streamline their payment process.
So, if you're tired of the high costs and headaches of cross-border payments, consider giving Corytech a try. With its cutting-edge technology and commitment to transparency, you can rest assured that you're getting the best deal possible for your business.
In conclusion, finding the right payment provider is key to saving on cross-border payments. With Corytech's fully-featured platform and commitment to transparency, businesses can streamline their payment process and save money in the process. Don't let high fees and hidden costs hold your business back - request a personalized demo of Corytech today and see how it can help you take your business to the next level.
