With the rise in cross-border trade and investment across the world, global payments have become a rage. This has contributed immensely to the rise of the global economy. Such a rise in international payments’ growth has contributed to the emergence of new and innovative trends and products. These innovations have brought a change in the competitive scenario of international payments, and hence, the businesses have a multitude of options to choose from. Overall, the global reach of businesses is driving the innovations in the international payments scenario, which, in turn, are increasing the scope of coverage of the businesses.
Cross-border payments, also called international payments, global payments, or overseas payments, are the transactions where the payee and recipient of money are located in different countries. These international transactions are made possible with the help of payment gateways or banks. Such international payments may happen between individuals, banks, or firms who intend to transfer funds to the other party for any transaction between them.
Some of the international payment methods include international wire transfer using a network such as Swift, online payments with the help of payment gateways such as PayPal and others, international money order, or a letter of credit. All of these global payment methods have their own merits and demerits, along with some restrictions and rules. The payee and recipient of money can decide amongst themselves the preferred method of payment and acceptance. Depending on the method you choose, the country to which the funds are being sent, and the number of intermediaries involved, international payments generally take two to five working days to clear.
Whatever methods are employed for ensuring global payments, it is critical to ensure accuracy, security, and efficiency in the payment process. This becomes a bit difficult because of the involvement of complicated regulations, customs, and rules of multiple countries engaged in the transaction. Therefore, we provide you a list of best practices for international business payments below so that you can avoid any errors, delays, or threats in such overseas payments.
1. Abide by all the appropriate rules and procedures for making global payments
While following any payment method to make any payments, there are many details required to be filled along with some approvals. It is a complicated procedure, and the complexities increase in the case of overseas payments. You must follow a proper procedure to fill in the details, get the approval, review the form, document it, and track the transaction until the recipient confirms its receipt.
Most of the methods for making global payments are secure and have enough controls in place to check any frauds or errors in transactions. However, you never know a small error from your side or a minor glitch in the technology may just fail the money transfer. Therefore, it is essential for both the parties involved in the money transfer to review the international payment method used, document the transaction for future use and audit, and track it until its end.
2. Opt for the popular regional payment methods and their providers to ensure swift global payments
It is good to know about the popular payment methods in the regions where you have frequent international transactions. Conduct research to find which payment methods are preferred and which are the popular providers in that region. For example, in some regions or countries, online payments through payment gateways are preferred, then you should adopt those methods so that paying and receiving payments happen quickly. Furthermore, knowing what payment gateways are generally popular will enable you to use those gateways for global payments in that region or country.
If you have operations in most of the world’s countries, adopting payment gateways specific to one country may prove costly and cumbersome. Therefore, it is a wise decision to research the local preferences of the region. Adopting such practices would enable the businesses to attract more clients in that region since customers look for ease and quickness of paying and receiving global payments.
3. Try to use one digital payment solution for all your clients to ensure efficient and error-free cross-border payments
Notwithstanding the approach discussed earlier, it is good to work your way through an approach that increases global payments efficiency. This is possible through using a single or two digital payment solutions having all the features and functionalities. It should be able to make and receive domestic and global payments across different countries and in various ways possible. A company with operations in multiple countries can adopt two solutions to cover most clients’ preferences.
It is a waste of productive time to discuss different platforms with different vendors and learn the process of making overseas payments and accepting money for each. The risks of making minor errors due to wrong data entry or missing some entries are highly possible when new forms are required to be filled for every payment transaction. Therefore, it is wise to use a comprehensive, easy to use, and feature-rich platform to ensure errorless and faster payments, thus boosting efficiency.
4. Avoid mistakes by being extra careful in the procedure of making and accepting cross-border payments
The payee must verify the recipient’s bank routing information. The payee must comply with all the global payments rules, as specified by the client’s country of residence. The recipient must comply with all the requirements to approve the payment to be received from the payee. There are also global rules and regulations to ensure money is not being used for money laundering and financing of terrorism. Thus, the procedure of making and receiving international payments must be managed seamlessly and in compliance with global and country-specific rules to ensure its successful completion.
5. Comply with all the prerequisites for global payments
avoid any fines or penalties. For example, the European Union has implemented the GDPR (General Data Protection Regulation) to impose strict rules on collecting and using consumer data and related permissions. Another example is documentation requirements in countries such as China and India because they require central bank reporting. Therefore, it would be appropriate to select a global payments solution provider to ensure such global and country-specific compliance and save time and money.
6. Employ a fraud strategy to save oneself and your client from potential online frauds in international payments
Your customer did not receive the payment; your supplier sends you details of new payment arrangements, your supplier’s accounts get hacked, you make the payment, and the recipient does not receive it – these are all some instances of the ways frauds happen across the world.
Online frauds are increasing day by day. The fraud strategies, security measures, and technologies to save from fraud have also risen over the years. Still, the hackers and fraudsters find new, innovative approaches to hack your and your customer’s account.
Some of the tips include:
- Check your customers’ credentials, specifically in the first transaction, since you need to be doubly sure where your money is going or from whom you are receiving money.
- Keep your hardware and software updated and secured through firewalls, anti-spyware, and anti-virus to reduce the vulnerability to hackers.
- Review all your international business payments carefully.
- Dual verification for payments and relevant documentation of each global payment transaction is helpful.
- Managing the transaction flow through tracking of transactions, reporting of each incoming and outgoing money transfer transaction, and reconciliation of bank accounts frequently are good habits to safeguard from fraud.
- Get an internal audit done for your accounting records and check if the internal controls established by the management are working as intended
Adopt these best practices to remain compliant with the requirements of global payments. Furthermore, discuss with your business partners with whom you have regular transactions regarding any specific payment methods preferred or additional compliance requirements. Whatever your global transactions are: managing foreign exchange risks, payments to suppliers, repatriation of funds, international payroll, or liquidity between currency accounts, you can manage them quickly and easily with these tips.
With these best practices, you will be able to avoid the common pitfalls of international business payments and become efficient and effective in making and accepting global payments. In addition, adopt the latest and updated innovations to give the best global payments experience to your business partners.