What to look for in an international money transfer provider
For many businesses today, it’s not always enough to be established domestically, it’s proven hugely beneficial to expand overseas. The benefits include:
- Increasing your customer base
- Avoiding local competition
- Keeping control of pricing
- Building a global brand
- Creating greater market share
Even more, with e-commerce booming at the moment, more people are expanding their small businesses into international markets through online selling platforms like Amazon and eBay.
With this drive to expand globally has come a need for financial services that can keep up with the complexities that come from dealing in multiple currencies, managing overseas staff and suppliers, risk management and more. As a result, the marketplace for currency exchange is becoming increasingly competitive. This means that the entry of new players who scale rapidly, and then disappear is bound to make business and consumers think about what to look for in an alternative service provider to the banks.
It begs the question then, what should a business be looking for in strong and stable partner in international payments? While the big banks have always been the go-to, many alternatives can offer what the banks do (like a strong history, banking relationships and responsibilities that come with regulation and compliance), but additional features like competitive rates and risk management tools. It’s through the additional features that come with offering a specialist service that means businesses can be assured that they’ve got a partner in payments who can help them grow.
Ecommerce is a vehicle for small business success overseas
With the accessibility that online resources and new partnerships can provide, the ecommerce market has exploded in recent years. The demand for fast, seamless online shopping and delivery has been part of this unprecedented expansion.
In 2018, 23% of retail sales in China were done online, and that number is expected to increase by 30% in the coming years. Similarly, UK shoppers are spending online almost 20% more than anyone else, so the opportunities for growth are everywhere.
In terms of where these marketplaces are appearing around the world, Amazon owns about 44 cents out of every ecommerce dollar spent in the US and are the owner of a Global Selling program that represents more than 25% of total third-party sales. Many British sellers have also been taking advantage of the international market, making over £1 billion in sales in continental Europe in 2017. India and China are also expected to have the fastest growing markets as their economies pick up speed.
What to look for in an alternative to the banks
When it comes to finding a foreign exchange provider, there are alternatives to the banks that are established, stable and secure. Here’s what to look for when shopping around:
1. Global reach, local feel
When it comes to getting the best rate at OFX, we have 16 partner banks (which means over 150 bank accounts in locations around the world, across 55 currencies). We call this system Global By Local (GBL), and this means that we are able to send funds directly between these banks accounts, rather than using an expensive network of external banks.
2. Understand that risk management and global expansion go hand-in-hand
As a company that has been established for over 20 years, OFX are always looking to new means of ensuring our customers get the best deal. Say for example that an online seller wants to keep cash flows predictable, the ability to lock in an ideal rate for future payables and receivables (like paying overseas staff and suppliers and bringing profit back home) using OFX’s Forward Contract means that you can protect against market uncertainty in the wake of world events (think Brexit).
A Forward Contract allows a customer to lock in an ideal rate and then transfer that amount at any point for up to 12 months.
Similarly, OFX’s Limit Order option means that you can set a target rate, and if it’s reached, a dedicated dealer or someone in the customer support team will contact you via email or phone to complete the transfer. You can then choose to have the transfer processed automatically, or at a later date, even potentially rolling it into a Forward Contract.
3. Find tools for ecommerce success
Risk management tools are great for business customers more generally, but what tools exist specifically for online sellers? As an emerging market, there are few players who understand the unique challenges faced by online sellers. That’s why OFX created the OFX Global Currency Account, which essentially gives online sellers the equivalent of a local bank account in the US, Canada, UK, Europe, Australia and Hong Kong.
David Nichols, Director of Enterprise Development and e-commerce at OFX explained in a webinar with Seller’s Choice that this enables clients to collect their overseas revenue in the currency they’re selling in internationally, and the ability to move that back to their home currency at a much better exchange rate than they would with a marketplace or a bank.
Alternatively, clients can use the funds they’ve accumulated internationally to pay their taxes or suppliers, which essentially removes the requirement of moving money around the world unnecessarily.