Working with international suppliers has many advantages for small businesses. Access to a larger market, better supplies for a lower price, and saving costs are just a few of the benefits businesses venturing onto the global market may encounter. If you’re worried about finding international suppliers, fear not. We’ve got your back.
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Once you have found your perfect international business partner(s), you have to sort out many technical details, including shipping, taxes, global payments, and customs. Negotiating is usually a tiresome, slow process, but remember you only have to do it once to get the ball rolling. After that, everything should go like clockwork. Shipments arriving, payments being sent, day after day.
Only, it’s not that simple. Products crossing borders are regularly examined by customs authorities, like the US Customs and Border Protection Agency. This is understandable. After all, a country has the right to monitor the products crossing its borders to avoid dangerous substances, counterfeit products, tax evasion, and any other potential problems.
But what about payments?
In theory, global payments should travel at the speed of light. Or at least the speed of the internet. It’s easy to see why: no actual bills or coins travel across borders. The only “thing” that travels is data, and we know that data can whiz from one corner of the world to the other within seconds.
Have you ever heard somebody complain about emails from Hong Kong taking four to seven business days to reach the US?
No, that would be outrageous. So why do global payments take that long, or even longer?
Global payments systems – a look behind the curtain
In the age of mobile banking, many banks offer convenient apps to their customers. Banking via a 21st century app, you’d think that their technology behind global payments is just as modern and convenient.
Well, it’s not.
International wire transfers still mostly rely on the global payments systems invented in the 1970s. Namely, the SWIFT system. But contrary to what its name suggests, this system is slow, intransparent, and loaded with insecurities.
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In a nutshell, the SWIFT system sends your transfer through a network of banks located everywhere on the planet. And while this sounds harmless, it’s not. Why? Because the second your payment leaves your bank, nobody knows what’s happening to it.
Your payment travels from one bank to the other, but there’s no clear map showing you the route it takes. You may think it’s well on the way to the recipient. However, it may be parked for three days in a Spanish bank that’s closed for a long fiesta. From then on, it can pass through another 12 banks and take four more days until it reaches the recipient.
But then again, this is just a guess. Why? Because nobody’s tracking your money.
This old global payments system leaves your money vulnerable to two vices: theft and fees. How come? Well, the more hands (or banks) the money goes through, the more opportunities hackers have to intercept the payment.
And, of course, there’s the question of fees. Did you think those banks would handle your payment for free? No, they don’t.
Costs of global payments
The actual costs of an international wire transfer depend on the fees charged by your bank, the current foreign exchange rate, and any hidden fees the banks involved in the process may levy on your payment.
The trouble is, you never know how much it will be when you send the money on its way.
Upon ordering the transfer, your bank will tell you the exchange rate they use and their fees. However, there’s usually a landing fee charged by the recipient bank that your bank has no idea about, not to mention any other handling fees all those other banks may levy.
Chances are, your payment ends up somewhat short of the amount the recipient expects. Which means you’ll have to order another wire transfer to make up for the missing amount. No wonder global payments deter many small businesses from international trade.
It’s easy to see how these unexpected costs and fees can bury your business. For many small businesses, budget is usually tight. You can’t afford to spend $214 here and $852 there on hidden bank fees with each and every global payment you send.
But even if you could, would you want to?
Fintech – the perfect solution to global payments
Thanks to financial technology or fintech, small businesses today have a much better option to send money abroad than bank wires.
Fintech companies, like Veem, allow you to send global payments for a fraction of the costs of bank wires, with none of the transparency and security concerns.
According to a recent study, small businesses want faster global payments at a lower cost. Fintech is able to deliver just that.
Veem, for example, allows you to send and receive global payments with just a few clicks. You’ll know all the costs upfront, including potential landing fees and foreign exchange rates (by the way, Veem offers very favorable foreign exchange rates).
What’s more, Veem can track your payments in real time, letting you and the recipient know when the transfer will land. Veem integrates seamlessly with your accounting software, saving you even more time and manual labor. No more copying data from your accounting software to your payment platform.
To ensure maximum security, Veem personally contacts each recipient, verifying their data and ensuring your payment ends up exactly where intended.
More than 150,000 businesses worldwide have already discovered the advantages that Veem’s global payments provide. Use the power of this network to help your business succeed in international trade.
Don’t give the outdated global payments system of wire transfers a chance to bury your business. Choose a fintech company like Veem and let fast, secure, and trackable global payments help your business make the most of international trade.