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International Money Transfer Options - Vendor Portal Expert

International Money Transfer Options

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international Money Transfer Options

International Money Transfer Options

Managing an International money transfer can prove to be challenging for some companies doing it for the first time. There are regulations, cost considerations, credit risk, etc. to consider while also ensuring that a trust-based relationship may eventually be established with the trading partner. We have already explored the various methods of making international payments for trade along with their risk profiles and benefits in a previous post. Here, we discuss in detail how to go about trading without using documentary credit – through direct international money transfers.

Considerations

The first step is to decide the actual amount to be paid. It is not a matter of only paying the price printed on the back of the product – there are things to consider like import duties, shipping costs, insurance costs, exchange rate fluctuations, currency conversion fees and so on. Once it has been decided which party bears the responsibility of each element of the costs, we can move on to the next step.

Options

There are many institutions which may be approached to initiate a foreign money transfer remittance:

Banks are usually the first stop. An international money transfer is rather similar to a domestic transaction with the exception of costs and information required. Banks usually ask for recipient details like account number, SWIFT code of recipient’s bank, local address, etc. There would be a transaction fee based on the destination country and, of course, a currency conversion fee based on the currency pair. For example, it is cheaper to convert USD into EUR than it is to convert USD to say, Nepalese Rupee.

The second options are online international money transfer companies. These options usually offer a much cheaper rate because they have a fully online setup and do not have the brick and mortar costs associated with a bank. Other than that, the process is usually the same.

The third option is using online like Paypal, Payoneer, Skrill, etc. This is perhaps the easiest way, but the recipient also needs to have an account with the same service provider. Further, the recipient has to link his bank account to Paypal so that he can withdraw the cash. However, once the initial set-up is done, the only consideration is the processing fee/ conversion rate

The fourth option is to use wire transfer service providers like Western Union of Money Gram. They are somewhat similar to banks but have a host of other services. For example, with Western Union, you can transfer using a branch, online, through the app or over the phone. Money can be received by the recipient as cash, account transfer or in a Western Union card. Again, it all comes down to transaction costs.

Communications of the International Money Transfer Details

Regardless of the method that you choose for transferring money, there will always be an important step in communicating the status of invoices and payments back and forth with your international supplier partner. These communications need to be in near real time, secure and in context with the appropriate documentation. To accomplish this, it is recommended to use a web-based Vendor Portal that has Supplier self-service, multi-language and advanced buyer configuration capabilities so as to maximize efficiency.

Conclusion

Regarding cost effectiveness, the international money transfer agents usually offer the best rates. Online providers like Paypal have the advantage of ease of use and wire transfer service providers like Western Union have a large array of service offerings. You should make a choice based on what you need the most. It might seem that we have neglected the banks- they have high cost and high compliance requirement. However, they are the safest way to perform the transaction. Also, most of international trade does not happen through direct transfer but through documentary credit which is handled wholly and solely by the global banking system. Lastly, it is possible to utilize state-of-the-art web-based Vendor Portals to make this entire process easier to manage.

Joe Flynn

Joe is the Founder of Lavante, Inc. In 2001, Joe co-founded Lavante Inc. (formerly AuditSolutions LLC) with the vision of transforming the traditional manual-based AP audit recovery industry through the use of sophisticated on-demand technologies.

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