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You’d think that paying a company in another country would be routine by now. Unfortunately, that’s not the reality for most businesses today. Instead, international payments are tricky, expensive, and slow. Worst still, you never know the exact cost of an international payment until the transaction is complete. So, your suppliers get nasty surprises and your cash management is based on guesswork.
For domestic payments, this has all been solved. If you’re paying a business in your own country, you’ve got a choice of relatively low cost and efficient payment options. But the situation for cross-border payments is far more complex and expensive.
The average cost of using your bank to transfer money across international borders is somewhere around 7%¹. And that single number can only be an estimate, because it hides a myriad of fees and opaque FX rates applied by the banks processing the payments. That’s a lot of money, but it doesn’t buy an efficient service.
Until now, there have only been two options for making international payments. This article summarizes the two standard ones and introduces you to a third (and we think much, much better) way.
The reasons for paying someone overseas are pretty standard:
Settling invoices for overseas suppliers or customers
Paying overseas employees
Making intra-company transfers
Clearly, these are all routine transactions that ought to have well-grooved
processes by now. Most businesses choose one of two main ways to make international payments:
you can use your business bank or an international payment specialist. Each has its pros and cons.
This episode on the Payments Podcast features a special guest from Currency Cloud discussing how international payments can be a lot easier than you think, if you do it the right way.
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