The expansion of global commerce has created a need for more efficient international payment systems. Outsourcing labor, purchasing materials, and running satellite offices in different countries are just a few reasons why this has become increasingly important for growing businesses. Each nation has different regulations and currencies, which can make the international payment landscape complicated if you don’t have the right payment solution.
What is an international payment?
An international payment is the transfer of money from one country to another. In some cases, that involves a currency exchange. For example, a payment from the U.S. to the UK would require a conversion from U.S. dollars to British pound sterling. International payments can be done by bank transfer, through payment gateways, or with wire services.
How do businesses pay internationally?
You have a variety of options for initiating an international payment, including your business bank account, payment gateways, and third-party services. It’s crucial to find a solution that meets your needs and expectations.
Here’s what to look for:
- Coverage – Be sure to check the coverage area of your payment option. Don’t assume that your bank or payment gateway can process a payment to the country you need to send it to. Some international banks only do business with other banks.
- Speed – Getting a payment in on time is just as important internationally as it is domestically. The best international payment solutions can get your money where it needs to go in as fast as 24 hours.
- Cost – International payment processing fees can be expensive and they’re not always transparent, especially with some third-party providers and payment gateways. Research may tell you that your bank is the most cost-effective and transparent option for transferring funds.
- Limits – Transactions over a certain amount might not be allowed by a payment gateway or third-party processor. If they are, you could face additional fees. Another issue is security. Banks typically have stronger security protocols for large international payments.
- Experience – The cheapest option isn’t always the best option, particularly if the company offering it is new. Cross-border payments are a complex process that should be handled by institutions you trust.
What is the most common international payment method?
Typically, international business transactions are completed via wire transfers (like via the SWIFT network) or local payment rails. Both of these methods are faster than any other option out there, giving business owners peace of mind that their payments will arrive on time and in full.
What do I need to make an international payment?
Global demand for faster payment processing has pushed the banking industry to simplify the process and expand online access to payment services. International payments can be initiated from your bank using the following information:
- Payee’s account name
- Payee’s account number
- Payee’s bank SWIFT/BIC, domestic routing code, or bank address
Additional information may be required, depending on where you’re sending your payment. For example, you may have the ability to select which currency you’d like to pay in, i.e., U.S. dollar or British pound.
How long do international payments take?
The speed of an international payment depends on many of the same factors that affect a domestic transaction. Who, what, where, when, and how you send the payment are all variables that determine how long it’ll take to get there. Most international payments tend to arrive within 1–5 business days.
Here are some factors to consider when sending money internationally:
- Who are you sending the payment to?
- What is the amount of the payment?
- Where is the payment going?
- When are you sending it? (day/time)
- How are you sending it? (wire transfer/ACH/gateway)
Other factors include the security steps required to send funds and whether the country on either end is celebrating a bank holiday when you send the money. “Instant” transfers don’t happen over international borders, so your payment may unfortunately take a little longer. As we mentioned earlier, with the right payment tool, your payee could receive funds in as fast as 24 hours.
What fees are associated with international payments?
Many traditional banks charge a foreign transaction fee that is not predictable or well-advertised. This means that customers may take the time to add their international payee to their bill pay tool and set up their payment, only to be hit with an unexpected fee at the end.
Business owners should look for a platform that’s transparent and upfront about foreign transaction fees. Fees are part of the cost of doing business, so it’s best to evaluate them like any other cost and try to find the most cost-effective option.
You might find that the best option for international payments has a flat transaction fee and then a transparent percentage for converting to foreign currencies.
What are the challenges of international payments?
International business payments are less challenging than they used to be, but there are still some obstacles to overcome. Speed is always a concern. Will your payment get there on time? Fees can be high and they’re not always transparent with the payment processor. Expect to pay a foreign transaction fee and possibly a conversion fee if you need a currency conversion.
The most notable challenge is finding the right international payment method for your company. If your business checking account offers a bill pay solution, check if they can send payments to the country you’re doing business in. That’s probably your best option over a payment gateway or third-party wire service.
If your business needs to send payments internationally, you should prioritize fee transparency, speed and convenience, and processing speed. That way, you can send cross-border payments with confidence and continue to expand your international business activities.
See how easy it is to send money internationally with Bluevine.