Today’s ambitious entrepreneurs are increasingly looking beyond their domestic customers. Seeking enhanced brand recognition, a competitive edge, and a deeper customer pool, they are setting their sights on the global marketplace. 

If you also want to take your company to the next level in this way, it is crucial that you understand how to accept international payments, including the methods that will work best for your industry.

Understanding international payments.

When an international payment occurs, the payer and payee are based in different countries. 

Often, two different currencies are involved, leading to the need to prioritize regulatory compliance and to understand exchange rates and other fees. 

Additionally, there are differences between domestic and international payments, including currency exchange, regulatory compliance, processing time, transaction costs, risk factors, and the intermediaries involved.

How long do international payments take?

Since international payments must navigate through more complex systems, processing generally takes longer. 

Where a domestic transfer usually happens on the same day, cross-border payments may not go through for anywhere between one and five business days. 

The costs are increased to process cross-border payments because of the intricate landscape through which they must move. Due to higher chances of fraud, geopolitical issues, and sanctions, cross-border payments are riskier. 

They also involve multiple financial institutions in different countries, further increasing their complexity.

Types of international payments.

There are several common types of cross-border transactions. They include wire transfers, international checks, foreign exchange brokers, international money orders, and online payment platforms.

Not surprisingly, there are various ways to transfer funds across borders. The type of international payments that you choose to accept depends upon how their strengths and weaknesses fit with your company’s industry, traits, and priorities.

Wire transfers.

Particularly for large funds transfers such as when buying real estate, or compensating overseas suppliers, businesses might opt to make payments via wire transfer. 

This procedure generally occurs directly between one bank or financial institution and another, and is both reliable and secure.

International checks.

Even today, some companies prefer to pay using international checks. This is true despite the fact that this method has a slower processing time. These are physical checks drawn on the customer’s bank that can be cashed in another nation.

Money orders.

Customers wishing to make smaller purchases might opt to use an international money order. These are prepaid and, as such, are considered to be relatively secure.

Online payments.

When you are operating an ecommerce business with an international presence, you will probably want to link to an online payment platform. These solutions are usually quite easy to set up, and can also work if you want to handle larger funds transfers.

Best practices for accepting international payments.

Maintain best practices to ensure that your international payments are secure, efficient, and compliant. 

These include understanding costs and exchange rates, complying with regulations, keeping accurate records, using secure payment methods, being transparent about terms, and protecting against fraud.

Understanding costs and exchange rates.

In order to safeguard your brand and the integrity of your customers’ cross-border purchases, you should implement a series of effective protocols and procedures. 

Start by understanding the many costs that you will face, including transaction and currency conversion fees as well as costs from intermediary parties. Remember that exchange rates fluctuate and should also be taken into consideration.

Complying with regulations.

Regulations apply to you in your home nation, as well as your customer’s native land. Gaining a thorough grasp of both sets of laws and standards is a must.

Keep accurate records.

Take pains to make your record-keeping buttoned up. Doing so is crucial during internal and external audits and for regulatory compliance. Note the date, payment amount, exchange rate, fees, and customer details for every international sale to protect yourself and your customers.

Use secure payment methods.

Carefully choose a payment services provider with an established reputation for reliability and regulatory compliance in your industry and your customers’ country. If difficulties arise, they should also have competent and readily available customer support to assist you in resolving the issue.

Be transparent about terms.

Being fully transparent about payment terms and contracts, including currency, transaction fee responsibilities, payment deadlines, and potential penalties, is a must. Doing so helps to enhance your relationship with buyers and provides a layer of protection if disputes arise.

Protect against fraud.

Finally, put procedures and staff training in place to avoid fraud. Many crimes can be prevented before they happen if you and your employees are aware of the red flags that often signal international security breaches.

When you take a dive into the waters of the global marketplace, you can look forward to the potential for brand and product expansion that could lead to robust growth in your company’s reputation and footprint. 

Support this exciting expansion decision by building a foundation of strong international payments knowledge and best practices, and you will have set the stage for long-term cross-border commercial success.