A large number of businesses trade with customers and suppliers located outside their country, but dealing with non-domestic payments presents many challenges for businesses. Aside from currency fluctuations and cash flow problems caused by delays in sending and receiving cross border payments, transaction fees have the potential to cause issues that impact the bottom line.
The fees associated with cross border payments are often overlooked, and yet businesses both big and small that trade globally are accruing them every day without realising there are alternatives to using conventional banks. This is despite some transaction fees costing in excess of £30 per payment processed, which is particularly costly for smaller businesses that process low value cross border payments infrequently.
What are the alternatives?
Payment Service Providers (PSPs) connect to banking rails (such as real-time gross settlement systems) via banks. This allows them to process payments from credit and debit cards, e-wallets, prepaid products, e-vouchers, electronic transfers of funds like bank transfers, and real-time transfers.
A Payment Service Provider is often given preferential rates by banks due to the volume of payments they process, meaning that businesses can benefit from using them as an intermediary. To add value to their customers, a PSP may pass on these transaction fee savings to its customers.
Why haven’t more businesses looked into reducing transaction fees?
In a recent survey conducted by Banking Circle, nearly 50% of businesses surveyed were dissatisfied with the rates that they pay for cross border payments and 80% stated that they would consider changing supplier if they could reduce costs. However, major barriers preventing businesses from making the change were cited as a lack of both time and the resources required to research alternatives.
See if your business could already benefit from lower cross border transaction fees
Banking Circle works with a number of PSPs and FX payment specialists to help them reduce their cross border transaction fees – meaning that they can pass these savings onto their customers. To find out if your PSP is a Banking Circle member, get in touch today.