How can international money transfer processors leverage new technology in reducing the costs of international money transfers? How can businesses implement the services of these processors to save on costs, time, and speed when sending money abroad?
Businesses and individual contractors have become so reliant on overseas services, hence introducing the need for international money transfers. While the employers understand the costly nature of sending and receiving money overseas, they might not have an idea of how the costs are broken down. Fundamentally, sending money worldwide is different from a domestic transfer.
The complexities surrounding the former rise from multiple intermediaries and conversion rates from one currency to another.
Nonetheless, the World Bank found out the trend of international transfer costs has been declining since 2000. This data suggests reducing transaction costs by at least 5% could save an estimated $16 billion annually when sending money abroad. This World Bank study shows a graph analysis of the global price of sending $200 for ten years between 2011 - 2021.
This article is about helping businesses cut down the costs of international payments. The information here will teach the average business person how to balance the costs of global payments with the potential of an international network. Meanwhile, the blueprint for achieving low costs is choosing a payment gateway with a history of convenience, reliability, speed, and affordable costs.
The Composition of International Money Transfer
To understand the arduous task of remitting money abroad, first, one should know the role of Money Transfer Operators (MTOs). The task executed by MTOs has been reducing over the years, which attracted a gradual downslope in the costs of doing international business and sending money abroad.
MTOs facilitate global payments and transactions. They verify, clear, and conduct currency conversion between the sender and the receiver. Usually, these operators are not banking institutions but financial firms. Apart from the MTOs, the value chain of an international transfer involves banks and regulators. Therefore, most payment operators ensure the exchange rate is low, and there is no time wastage when processing a transaction.
Efforts by the United Nations and the G20 have been targeting remittance providers to cut down the average cost of sending money overseas, particularly because most of the transactions are made by low-wage workers. These efforts have also paid particular attention to the role of global remittance in the economic development of emergent markets. This focus is among the reasons the average costs have been declining. Across the value chain of the payments system, banks have been under the highest pressure to reduce transfer fees because they remain to be the most expensive remittance processors.
Business to Business (B2B) Global Money Transfers
The general structure of B2B transactions begins from sending an invoice involving a large amount of money. An invoice naturally takes more time to process than the average consumer-to-business (C2B) or business-to-consumer (B2C) transaction. Additionally, processing the invoice and making the B2B payments might come with additional hidden costs. These costs could be processing fees, exchange rates, invoice management, and accounting costs. Hence, making international money transfers in the B2B segment expensive and time-consuming.
Market players can bet on increasing competition from payment processors which are implementing innovation to reduce costs. As a result, each financial firm explores cleaner technology to outshine the competition and fix the cost-time problem.
Paying International Freelancers and Remote Workers
Businesses engaging remote workers and international freelancers want flexible payment processors that are lightning-fast and have no hidden costs. Global transactions for these businesses must be painless, fluid, and in their own currency.
When considering a reliable processor, take into consideration speed. Only 25 percent of global payments happen in real-time or instantaneously. Some processors will even take 3-5 business days to process a transaction. Remember to list down your most preferred processors and filter out the most suitable ones using a checklist of costs, time, and speed.
XanPay provides an infrastructure for real-time payments. Businesses can use XanPay's solution to perform near-instant transactions with low processing fees. It also facilitates marketplaces to facilitate local payments to their customers. The solution creates a win-win situation for freelancers or gig workers and their clients. Apart from real-time payments, XanPay also allows automatic conversion in the preferred payment method.
Bottom line: How do you reduce the costs of International Money Transfers?
The best networks will reduce overhead costs for transacting internationally. It does not matter whether it’s a payroll consisting of remote workers from all over the world - a good payment system will process transactions instantaneously regardless of the volume. It should also be the cheapest. Notwithstanding, each worker will receive the payment in a convenient gateway and within reach of their local currencies and bank account. Here they have the choice to withdraw the money through their preferred local bank account. The infrastructure is also robust and able to process payouts at scale. Your business will benefit by saving time, money, and additional resources. Other essential features of a reliable global payment ecosystem are security, data privacy, and a responsive live support team.