American small businesses find it challenging to send money to Italy for Italian imports even though Italy is one of the largest export economies in the world. In 2015 it came in at seventh place with exports totaling 446 billion US dollars and the number has been on the rise since. In 2016, Italy shipped goods worth a total of 461 billion, almost three percent of all global exports that year. Such large figures accounted for 20.8 percent of the country’s GDP. But still, making international business payments to Italy can be a challenge.
Veem is here to help small businesses to transfer money around the globe more simply and transparently. Here are a few key things to consider when sending money to Italy for import goods.
US – Italian Trade
Even though over 63% of all Italian exports get shipped to other European countries, the US remains an important trade partner, importing almost $40 billion US dollars worth of goods in 2015 and $45 billion in 2016.
Known for premium leatherwork, expensive clothing, and even more expensive cars, Italy doesn’t lack brand recognition. Names such as Armani, Dolce&Gabana, Ferarri, and Lamborghini enjoy instant recognition in all four corners of the world. The automobile industry totalled 8.5 percent of all Italian exports in 2016, and clothing 2.6 percent. Here were Italy’s top five exports last year:
- Machinery (including high precision) worth $92.4 billion US dollars
- Vehicles worth $39.4 billion
- Equipment and electrical machinery worth $27.7 billion
- Pharmaceutical products worth $21.2 billion
- Plastics worth $19 billion
In spite of good trade relations and in spite of the fact that the US imports more than it exports to Italy ($16 billion worth in 2015), it’s still difficult for American small businesses to send money to Italy.
Sending Money to Italy: Regulations and Hurdles
Since the early 2000’s the European Union is constantly increasing efforts to reduce instances of fraud, money laundering, and prevent the funding of terrorists. The Fourth Money Laundering Directive (MLD4) functions as such a deterrent but, in the process, international trade involving small and medium businesses suffers due to a jump in bureaucratic practices—a jump that may cause difficulties with making payments.
The most important regulatory bodies that influence Italy’s economy are:
- The Italian Securities and Exchange Commission (CONSOB), which was founded in 1974. Its primary responsibility is the monitoring of the Italian securities markets and to penalize instances of unfair conduct.
- The European Central Bank, which has influence over Italian trade because Italy is part of the Eurozone. The ECB implements monetary policy and controls operations dealing with foreign exchange.
- The European Securities and Markets Authority (ESMA), which is one of the most important bodies when it comes to creating legislation and regulations for European Union member states, such as Italy.
How to Send Money to Italy
Small and medium businesses based in the US that either want or have to wire money to Italy have two choices. One is making use of the traditional bank wire. Business owners, however, should know that—besides having to deal with a veritable barrage of EU regulations—some of the challenges are specific to Italy. Doing business in Italy can be tough. The Italian financial bureaucracy is complex, the judicial system slow, and illegal practices like bribery, tax evasion, and corruption are still present.
Besides this, traditional wire transfers are not ideal for SMEs because of all the hidden fees and frequency of rate fluctuations. Out of a total of six trillion US dollars in cross-border payments performed by small businesses last year, $50 billion were spent on transfer fees.
There is another way for US small businesses to send money to Italy. The Veem international payment platform was developed to help small businesses to bypass the antiquated international banking system streamline their global payments processes, and save thousands per year on bank to bank transfer fees.
Here are a some additional resources for more on trading with Italy: