Editor’s Note: ‘Avoiding Common Pitfalls in International Payments’ is a guest article written by the Transwap team.
Ready to take the next big step and expand your business internationally? As a small business or startup, expanding your reach beyond your local market is very exciting. However, as you venture into the world of international payments, you’ll quickly realise that it comes with its own unique set of challenges. From currency conversions to varying payment methods, the complexity of international payments can be overwhelming. But don’t worry! Here are a list of 5 lessons to help you avoid common pitfalls and ensure simple transactions online.
1. Research the currency exchange rate
When conducting international transactions, currency fluctuations and unreasonable conversion fees can impact the final cost of the transaction. To avoid any unexpected costs, you should research the current exchange rate and understand any fees involved in the conversion process. Currency exchange rate is a critical component of international payments and it can quickly add up over time. Moreover, make sure you identify the Foreign Exchange (FX) risks in your supply chain and have a diverse supplier base to add extra protection for your business.
2. Understand the payment methods
Different regions have different payment methods. For instance, credit cards are popular in the United States, while bank transfers are more common in Europe. In Singapore, cards are the most popular method and followed closely by bank transfers. Over the last few years, contactless and e-wallet payments are also gaining a lot of popularity. Ensure that you research the payment preferences of your target market and understand the various payment methods to avoid unnecessary complications.
3. Watch out for transaction fees and costs
Cross-border payments commonly come with additional transaction costs, such as currency conversion fees, processing fees, and international wire transfer fees. It is important that you factor and watch out for these fees when setting your prices to avoid any unexpected costs that could impact your profitability.
4. Use secure payment gateways
Cybersecurity is crucial when it comes to international payments. International payments pose a cybersecurity risk due to the potential for financial data breaches during transaction processing. Therefore, you should use a reputable payment gateway that adheres to global security standards to ensure the safety of your customers’ financial information. Always make sure to use two-factor authentication to enhance security and protect against fraud.
5. Clear communication
Effective communication is key to avoiding misunderstandings, mistakes and ensuring smooth and quick cross-border payments. Clearly communicate the payment process and any associated fees to your customers. Keep them informed throughout the transaction, provide updates on the status of their payment and triple-check their information before sending any payments.
While international payments can be complex, the good news is that there are now fintech companies that offer a modern, efficient, and cost-effective alternative to traditional banking. With Transwap, businesses can enjoy fast and secure transactions, competitive exchange rates, and low fees.
How does TranSwap simplify cross-border payments?
TranSwap makes going global easy with our multi-currency global account. You get all the benefits of a digital business account but with added benefits that are built for a global scale. TranSwap’s multi-currency global bank account allows you to protect your profit and expand strategically.
- A hassle-free alternative to securing local bank accounts in each country of operation.
- Pay to over 100+ countries.
- Hold up to 34 currencies.
- Smoothly manage cash flow and bolster your competitive advantage in the local markets by paying and receiving money in the local currency.
- Instantly make international payments with no hidden costs and no need to maintain a minimum account balance.
- Use real-time exchange rates with no unwelcome surprises.
- Enjoy quick, secure and fast international transfers by accessing our global network of bank partners.
- Everything can be handled online. There is no need to visit a physical branch and no paperwork or phone calls.
Say goodbye to the hassle of traditional banking and hello to the future of international payments with Transwap. By following the five lessons above and using a trusted fintech company like Transwap, small businesses and startups can expand their global reach and conduct transactions with confidence.