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.
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.
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.