We’ve seen consistently rising numbers when it relates to e-commerce, leaving no doubt that online shopping is here to stay. As the digital economy continues to grow, the world is becoming even more borderless than before, with international buying and selling taking center stage.
While online marketplaces make it easier than ever for sellers to find buyers beyond their local markets, they are not the only ones who are expanding. Suppliers are now providing products beyond their own respective countries.
This makes cross-border payments — a process that often includes unforeseen costs, such as conversion and processing fees — more necessary than ever.
For sellers, a great relationship with their suppliers is crucial. They are the ones who can help secure new products, rush orders and get you a good deal. That said, fostering trust with your supplier when they’re based on the other side of the globe can be challenging, especially as there’s often a language barrier to overcome.
There are a number of steps that merchants can take to overcome these difficulties, including maintaining regular contact with their suppliers, establishing a standardized order placement process, and by paying on time, every time.
While an interpreter and a clear line of communication can take care of the first two steps, sellers need a reliable payment method, ideally with low rates to avoid heavy conversion and processing fees, to ensure timely payments.
Quick and Reliable Payments are Important
Payment concerns are often a source of tension between sellers and overseas suppliers. For suppliers, a delayed payment can slow down operations, creating a domino effect that impacts other parts of their business.
To avoid unnecessary friction with your supplier, it’s essential to use an effective payment method.
Bank wire transfers are a straightforward way to make payments, and many businesses choose to do so for both local and international suppliers. While this method might be great for a first payment or a security deposit, sellers looking to build a long-term relationship with their suppliers might want to consider other options.
Bank wires include a high degree of risk and offer little protection or recourse should anything go wrong with the transaction. They are also subject to delays of up to five business days (or more), and usually include high fees and margins on conversion rates.
When it comes to small transactions, a credit card can seem like a great solution, especially if it’s meant to take care of a pressing payment. Assuming that the supplier can process the payment, credit cards are both convenient and secure, as they provide some recourse in the event that the transaction is flagged as fraudulent.
However, making an international credit card payment involves high conversion fees and might need to be issued from a different account — a process that requires an additional transfer along with extra fees.
Peer-to-peer foreign transactions have gained popularity with small businesses in recent years. These types of currency exchanges usually support fast transfers and offer significant savings compared to banks.
There are a few caveats related to the companies that process these transactions, including a lack of customer security. Furthermore, the number of available currencies is often limited, and conversion rates are typically spot rates, which can increase processing times. If a business makes a transfer request for a set conversion rate, they often find themselves waiting, along with their supplier, for that rate to hit.
The Payoneer Solution
To maximize profits, e-sellers need a reliable payment solution that provides the ability to either convert foreign earnings into your local currency at low rates, or to use funds to pay suppliers for a small fee.
Using Payoneer, merchants can receive payments into dedicated collection accounts in all major currencies, including USD, EUR, GBP, CAD, AUD, JPY, CNY. They can then use the funds to make local payments in that currency at no additional cost. This means that you can automatically pay your suppliers for free in any country in which you have a collection account.
Payoneer also offers a VAT and sales tax payment solution, an easy way to withdraw funds to local bank accounts and international compliance solutions to avoid regulatory headaches.
Payoneer’s international payments experts make sure your payments are made according to country-specific regulations. At the same time, their multi-lingual customer care team is available 24/7 to help you and your suppliers.