Here’s how to pay online in a foreign currency:
- Create an account with OFX
- Log in to check exchange rates for your intended currency.
- Collect the necessary banking information from your recipient, including their name and bank account number.
- Set up and submit your transfer.
- Track your transfer with OFX mobile app.
The internet is the world’s new bazaar, the new digital high street marketplace. With a click of a button, shoppers from the United States, the United Kingdom, or Australia can connect with retailers and artisans in Japan, India, or Egypt and purchase the goods and services they love. Regional availability is being replaced with on-demand accessibility, and the only thing standing between buyers and their favorite international treasures is a trusty modem.
Well, that and the ability to pay for them.
With a reliable way to pay for international goods in a different foreign currency, a literal world of possibilities opens up to shoppers, especially those purchasing luxury goods. We take a look at what savvy online consumers need to know, and need to look out for, when buying online in a foreign currency.
Things to Consider When Buying Online in a Foreign Currency
Today, shoppers have lots of options when it comes to paying for foreign goods. If you’ve splurged and bought yourself a trip abroad, go ahead and pay that shopkeeper in cash! It’s still tough to beat the simplicity of a hand-to-hand paper transaction. But what if you could recreate that same experience online?
Credit cards offer convenience and familiarity, but they do so at a steep cost. That sneaky expense comes in the form of international transaction fees, and depending on the price of the item being purchased, they can be utterly staggering without your even realising.
International Transaction Fees
Have you ever purchased a crepe in Cannes or a gelato in Genoa and wondered why you received a bill for much more than the total cost of the tasty treat on your credit card statement? Then you, friends, have met our old nemesis: international transaction fees.
International transaction fees are charges applied by credit card companies to you, the consumer, when your credit card is used to make a purchase in a foreign currency. These charges are typical and obvious when traveling abroad, but they are also applied to purchases made online from a foreign vendor that operates in a foreign currency, as well.
Put simply: if you buy something with a credit card, and the transaction needs to be processed into a foreign currency to complete the payment, you get slapped with an additional fee from the credit card companies for the trouble.
How Much are Fees?
Fees, like burglars or ninjas, are sneaky. Most online shoppers can expect to pay an average international transaction fee of 3% when buying with a credit card. That typically shakes out to 1% going to the payment processor – usually the name on the card, like Visa or MasterCard – and 2% going to your bank for the trouble you’ve caused them, you pesky shopper.
Of course, not all purchases are created equal, and 3% of the cost of a cheeseburger is quite a different animal than 3% of a luxury automobile, boutique end table, or vintage handbag. 3% may only constitute a difference of $0.12 on your four-dollar grande cappuccino, but if you’re spending $10,000 on high-end electronics from Japan, your credit card is taking an additional $300 out of your pocket just for the privilege.
And it gets worse: most credit card companies charge a further margin of 3-5% on top of the daily market exchange rate. This margin is entirely at the discretion of the credit card company, and may not be obvious or readily apparent without doing a bit of research into your contract.
All told, you could be paying as much as an extra 6% more than the cost of your purchase just to use your credit card when buying in a foreign currency. That $10,000 stereo system now costs an additional $600, and that $80,000 worth of fine jewellery? It’s now going to cost $4,800 just to pay for it.
A Better Way: Direct Currency Exchange
There must be a better way, right? There is when you use OFX to send money internationally.
Before making your next international luxury purchase like fine goods or booking premium accommodations, inquire whether the vendor accepts payments directly to their bank account. If they do, you can use OFX to convert your payment into the correct foreign currency and send the money straight to them without ever uttering the words “credit card” or “international transaction fee.” With OFX, many major currency orders are processed within one business day of OFX receiving your funds so payment is simple, prompt, and reliable.
Plus, OFX offers unrivaled fraud prevention and risk management, winning the 2016 Digital Identity Excellence Award for International Fraud Prevention. With SSL encryption, identity protection, and 24/7 live monitoring and customer service, sending money internationally with OFX isn’t just cheaper and smarter. It’s also very safe. (Just make sure you’re sending to a legit recipient.)
So go ahead: buy that stereo, enjoy that jewellery, and book that holiday. Pay for it with OFX, leave your credit card in your wallet, and save yourself money, time, and hassle.
Importing Luxury Foreign Goods
So you’ve found the perfect cigars, or the rarest first edition print, or the most sublime vintage sports car, and you’ve gone ahead and outsmarted the credit card companies by using an online foreign currency exchange to purchase it. Congratulations! Now, how do you plan on getting it home?
There are strict taxes and laws that govern the importation of international luxury goods. Certain types of goods, like alcohol, tobacco, and firearms, are governed by further additional regulations. By keeping up with the specific regulations of your country, you can avoid any last-mile hang-ups and costly penalties.
When importing any luxury foreign goods, be sure to verify the reputation of the seller before you make a purchase. This is the simplest and easiest way to avoid disappointment. Once you’ve chosen a reputable seller and made your purchase, be sure to secure and arrange insurance for your items. Things happen during shipment: containers move, heavy cargo shifts, and fragile things break. You’ve spent good money on your purchase; you should make sure you get to enjoy it.
Choosing a trustworthy professional international shipping or courier company is equally as important. Select one that has plenty of experience and know-how handling customs and border regulations in your country to avoid hefty fees and fines.
Finally, arrange your for goods to be delivered – likely to your home or office. Most border agencies will not notify you that your item has arrived at the port, and if you don’t arrange for delivery or pick it up yourself, you may be held liable for costly warehousing expenses. If you choose to pick up the item at port, you should ensure you have a bill of lading from the shipper as well as their contact details before heading to the port.
Then, simply await your new treasure!
Of course, sometimes there are hangups that prevent deals from being completed immediately. Maybe the German sports car you thought was Forest Green was actually Kelly Green. Either way, complications often arise that may delay the purchase of your goods.
That’s exactly why OFX has built-in tools that help you mitigate that risk when paying online in a foreign currency.
Forward Exchange Contracts
If a complication arises that causes a delay in your purchase, but current market forecasts and conditions suggest that exchange rates will only grow less favourable the longer you wait, Forward Exchange Contracts from OFX can help.
Forward Exchange Contracts allow you to lock-in the current exchange rate, and using that rate, schedule a transfer for a point in the future – anywhere from two days to twelve months in advance.
If you’ve either already purchased the item, or want to guarantee an exchange rate while the seller gets everything in order, you can with Forward Exchange Contracts.
So go ahead: seize the rate.
They say that “luck” is when planning meets opportunity. Well, with Limit Orders from OFX, you can help make your own luck when sending money internationally.
In the event that you expect current exchange rates to improve, or if you are simply unwilling to assume the risk involved with sending money at a costly exchange rate, OFX Limit Orders can help. Limit Orders allow you to set a target exchange rate, a figure with which you are comfortable, and place your transfer on hold until that target exchange rate is met and automatically triggered, 24 hours a day, 5 days a week. OFX will then contact you to complete your transfer.
The internet has made international shopping nearly as commonplace as popping down to the corner grocery for a sandwich.
This is wonderful news for consumers looking for that one special treasure that they just have to have. Whether it’s wine, cars, art, furniture, jewellery, or something else entirely, luxury foreign goods have never been more within reach for domestic connoisseurs. But the international transaction fees charged by credit cards when buying online in a foreign currency can tack on major additional expenses that can be tough to swallow.
By using an international money transfer and currency exchange service like OFX, you can save thousands of dollars in unnecessary fees, get better and more responsive customer service, and enjoy stressless money transfers. It’s quick, it’s affordable, and it’s secure.
The future of commerce is online shopping, and the future of international purchasing is foreign currency exchange. Keep evolving.
IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. UKForex Limited (trading as “OFX”) and its affiliates make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog