Nowadays, business isn’t limited to a single location. Because of modernization, businesses are adopting new modes of transaction so that their products are available to everyone, no matter where they are.
Any company that wishes to expand its reach internationally must employ new methods of conducting business transactions, including offshore payment processing.
Offshore payment processing, also known as offshore merchant services, assists e-commerce and high-risk businesses with payment processing. Acquiring an offshore merchant account, on the other hand, can be time-consuming and necessitate a thorough decision-making process for businesses. With that in mind, here are some key points for businesses to understand about offshore payment processing and what it can provide to its niche markets.
What are major cross-border transaction difficulties?
First and foremost, merchants would be concerned about the additional costs and time required to accept secure cross-border payments, and dealing with a hundred other issues may appear to be a complex process. Receiving payment as soon as possible and at an affordable fee is a top priority for merchants; therefore, it is critical that merchants work with a reputable payment service provider who can facilitate the process.
They must also ensure that the payment service provider is transparent about transaction fees and foreign exchange fees so that merchants do not incur additional costs.
Because cross-border transactions involve so many intermediaries, sending money from one country to another can become prohibitively expensive at times. In addition, regulatory costs must be considered.
Transactions move slowly
Cross-border payments through traditional banking institutions typically take between two and five working days to complete. This is assuming no hiccups occur during the process. However, because there are too many entities involved in a single transaction, the turnaround time is relatively slow.
Concerns about security
Cross-border or not, every customer around the world wants to send money with confidence, without having to worry about security and safety concerns. Unfortunately, cross-border transactions are inherently vulnerable to high-level security breaches.
Transparency is lacking
Transparency is lacking in cross-border transactions. Why? The primary reason is that customers want complete transparency into the costs, fees, and deductions involved in cross-border transactions in order to avoid incurring any hidden costs.
Cross-border payment types
There are numerous cross-border payment options available, ranging from credit card payments and basic bank transfers to digital wallet solutions and PayPal. Customers all over the world prefer to pay in ways that are simple and convenient for them. Customers want to know that their financial information is safe and secure, in addition to having custom options.
Payments by credit card
For 80 percent of customers who like to buy products and services online, credit cards are one of the simplest and most convenient options. From the customer’s perspective, all they have to do is enter their credit card information and the OTP for the transaction to be verified and successful.
On the other hand, the merchant would have to do more work because the credit card network and acquiring banks would have to convert between two currencies. If the customer uses a global money transfer solution via high risk merchant account, such as PayPal, there may be additional charges or fees involved in the payment chain.
This method, also known as Global ACH (Automated Clearing House), makes it easier for customers to make payments to merchants in other countries. This type of payment is simple to make using local banks. This method, however, cannot be used with a credit or debit card. ACH payments are both inexpensive and convenient.
The only disadvantage of international ACH payment methods is that they require more time to process. Customers can transfer large sums of money and easily set up recurring payments because of their low transaction fee.
eWallets, also known as digital wallet solutions, are software applications that customers use to pay merchants. Apple Pay, Gpay, PayPal, and Alipay are currently the most popular mobile wallet platforms. Because it is a digital money service from wallet to wallet, eWallets do not entirely count as cross-border transactions. However, it will be when the recipient withdraws the funds from the bank.
Transfers by wire
Wire transfers are quick ways to transfer money from one account to another, but they come with a hefty transaction fee. If the customer transfers $500 in funds, the bank will charge a fee of $50. This may not be the best option for customers who need to transfer large sums of money.
Get Offshore Payment Gateway from PayCly and save money on International transactions
Merchants can also reduce overhead costs by finding a PSP such as PayCly that can provide invoice automation, which will lead to more money-saving opportunities in the future as the end-to-end AP workflow is streamlined. Furthermore, all of the regular, routine work that is typically handled by the accounts payable team can now be automated, resulting in touch-less operations.
Collaboration with Money Transfer Solutions
One way to cut those extra costs is to work with global money transfer solutions that can assist you with seamless cross-border transactions. Of course, they have lower transaction fees than a traditional bank, but they also reduce AP (Accounts Payable) headcount or redirect those employees to other related activities when you partner with a platform that automates invoices as well as global payments.
Configure to your liking
Alternatively, merchants can configure payments so that the payee bears the transaction fee. Almost all global payment platforms offer services for a low fee, so the payee will almost certainly absorb the fee.
If you are a merchant who is serious about expanding your business on a global scale, it is recommended that you gather as much information about cross-border payments as possible. Discovering which methods your customers prefer will assist you in providing the best customer experience possible.
The mechanism and logistics of cross-border payments may appear complicated, but partnering with an experienced and dependable payment service provider who can assist you with transaction challenges will be worthwhile.