Online Money Transfer Platforms for Quick & Cheap Overseas Payments
The current era of globalization opens a multitude of opportunities for small and medium businesses. Today, you don’t have to limit yourself to suppliers and customers located within your geographic reach. Instead, you can seek cheaper resources and expand your customer base exponentially. However, to do all this, you’ll need to use a money transfer service that doesn’t impose fees so high as to make the benefits of international trade useless. This means that traditional bank transfers are out for the majority of SME. Online money transfer companies provide a perfect solution to this problem.
Overseas Payments via Banks: Why the Traditional Way Isn’t the Best Today
Fees charged by banks for international money transfers vary, but on average you can expect to pay up to $45 for outgoing and $13 for incoming transfers (Nerd Wallet). Counting all fees and charges, you can lose over 5% of the money on a single international transfer. This number can rise over 10% of the total amount, depending on the size of the transaction.
Those numbers prove that global money transfers via banks can be prohibitively expensive for SME. After all, where is the point of saving 10-15% on material costs if you have to pay 10% more to your suppliers, right?
However, bank wire transfers have some very important advantages. First of all, you can use them to send money anywhere. Another advantage is the guaranteed security of the transfer. Objectively, banks have no choice but to charge their high fees in order to keep functioning and providing those advantages. A bank is a very expensive business to run, so the fees and various other charges are unavoidable.
Note that the banking relations are also very complicated. That’s why wire transfers take several days to reach their destination.
Online Platforms for Overseas Money Transfers as an Alternative for SMEs
All SMBs that want to succeed today understand the value of technology and use its power to cut costs and boost their productivity. Therefore, it’s only logical to apply the same approach to global money transfers. Stepping outside of the traditional banking network and using advanced technological solutions to transfer money faster and cheaper is the way to go if you want to keep a competitive edge.
Online money transfer companies, sometimes also called FX services as they provide an efficient foreign currency exchange service, are this kind of a solution. They use technology to provide security of bank money transfers but with far greater efficiency. The result is that you can make money transfers to any part of the world, quickly and without overpaying in fees. More importantly, you can do this using a simple mobile app. Therefore, the entire process can take only a few minutes.
Depending on the transfer destination, the transaction can be nearly instantaneous. Therefore, your SME can boost its productivity and efficiency greatly. Of course, you need to understand both FX platforms’ pros and cons. These money transfer companies offer convenience and speed. But they cannot provide the same level of security as banks, because they aren’t backed by the government. To make sure your transfer is secure, you need to use independent sources that provide objective reviews of the companies. They can provide reliable information about the trustworthiness of these services.
How Do International Online Money Transfers Work?
The best thing about online money transfer companies is that they are very simple to use. It’s partly due to this simplicity that they are able to offer low or no-fee transfers. The overall costs of running this kind of business are much lower than running a bank, thus the customers don’t have to pay a small fortune for the service.
The transfer process itself is rather straightforward. The best example to study is Transferwise as this company offers the simplest money transfer procedure. The transaction takes several steps:
- You make a transfer from your bank account to your Transferwise account in the local currency.
- The equivalent amount of money in the transfer destination currency goes to the recipient’s account from a Transferwise account in said currency.
Such FX companies offer the lowest ‘mid-market’ currency exchange rates, which is another reason why these transfers are so cheap. Note that with this type of transaction your funds don’t really cross the borders directly. Thus, you also get to save on the high international payment fees.
To make a transaction, you simply need to install an app and create an account. You will have the option to tie it to your bank account or transfer money to your app account using some other method. The whole process should not take you more than half an hour, and that’s when you are starting from scratch.
Benefits of Using Online Money Transfer Companies for a Small Business
Small and medium businesses can benefit from using online money transfer platforms in a variety of ways. The most important benefit is that you get a chance to fund your account in a single currency. However, you can quickly break it down to use for payments in a variety of currencies. All that will go with minimal losses because you will be able to get the best exchange rates.
Leading money transfer companies also offer a feature that allows you to freeze a specific exchange rate. This means that you will be able to use it for your business’ transfers even if the global rates change and become less favorable. In some cases, you can secure a single rate for a year, which is a great opportunity to save money in some volatile markets.
With such an advantage, a small business can increase its global reach greatly. As online platforms are both affordable and convenient to use, you will be able to seize new opportunities and take your own company to a new level. This might be the exact solution that will help you go global and succeed through such a major change.
But remember, not all online money transfer platforms are equal. It’s essential to research the company thoroughly and make sure that it has a good reputation among both users and financial experts. Take your time studying all details and make a few small transfers as a ‘test run’ before you start using the platform in earnest.