4 Practical Ways to Accept International Payments
If you run an international business or work with companies overseas, you may often wonder about the best way to accept international payments. Since there are many ways to receive funds from overseas, you may find it challenging to pick a reliable option.
When choosing a payment method to receive funds from clients, friends, or family members living abroad, you must consider several things. Such factors include the receiving fees, intermediary fees, speed of funds transfer, and funds security.
If you have trouble finding the best way to receive international funds, worry no more. This guide explores the most reliable and affordable payment methods to consider.
Ways of Accepting International Payments
When receiving money from abroad, it’s essential to consider the fastest and most convenient option. While some people would prefer using banks for international transfers, it’s usually one of the slowest and most expensive options, although it works.
In this article, we will discuss how to accept international payments without struggle. Here are some of the options to help you get started.
- Online Payment Options
- Bank-to-Bank Transfers
- International Money Orders
- Home Delivery or Cash Pick-Ups
1. Online Payment Options
One of the best ways to receive money from international clients is through online payment gateways such as PayPal. With these options, you’ll access your funds quickly because they are easy to use. The good news is that online payment options are often cheaper.
When considering cost, it’s essential to check the exchange rates and conversion fees. Other than the fees, also consider the technology that the online payment gateways use and its features. Do they offer multiple payment options? Do they integrate other apps?
Different online payment options have different fees features, which you must consider before you pick an option. Apart from PayPal, other online payment gateways are Stripe, Google Pay, Shopify Payments, Amazon Payments, and Payoneer.
Pro Tip: Most online payment options are ideal for receiving payments of smaller amounts from international clients.
2. Bank-to-Bank Transfers
Another safe, reliable, and convenient option to receive money from abroad is through bank transfers. It involves transferring money from a bank overseas to your bank account. In this case, the sender initiates the transfer into your bank account.
When opting for bank transfers, you have to send your banking details to the sender, including your account number, name, and residential address. It’s also vital to provide your bank’s name, SWIFT code, or BIC Code. You can get the details from your bank.
While it is possible to do bank-to-bank transfers for international payments, it’s essential to note that this is one of the most expensive options. A plausible explanation is that banks use BIC and SWIFT codes for international wire transfers, which can be costly.
Also, most banks will add their foreign exchange fees to the margin of the current exchange rates. In other words, they don’t offer competitive exchange rates for international funds transfers. That makes their conversion rates exorbitant. So, if you accept international payments through bank transfers, you’ll end up losing money.
Pro Tip: When using the bank transfer method to accept international funds, work with Knightsbridge Foreign Exchange to save on the banks’ high exchange rates.
3. International Money Orders
If you thought that money orders have become archaic, then you are wrong. You can still accept international payments from foreign countries through money orders. Despite declining in popularity due to the advent of online transfers, it’s still a viable option.
So, how do international money orders work?
Depending on your desired currency, the individual sending the money can obtain a bank draft from an international bank or financial institution overseas. At that point, the sender will use the money in their account to cover the cheque then post it to you.
Once you receive the cheque, you can deposit it into your bank account or cash it at your local bank or other companies that offer cheque-cashing services. Even though this is a viable option to accept international payments, processing the transfer can take weeks.
Pro Tip: International money orders are not ideal for urgent payments because the transfer process is slow. It may also attract relatively high fees.
4. Home Delivery or Cash Pick-Ups
Would you like to accept international payments in the form of cash? If so, then a cash pick-up would be your go-to payment method. It’s a simple process that works like a home delivery service. As the name suggests, cash pick-ups allow for cash payments.
All you’ll have to do is choose where to get the cash, whether it be your bank, a designated store, or a third-party merchant. The good thing about this method is that you don’t have to open an account at any bank or financial institution to receive international payments.
Once the sender transfers the money, they should send you a transaction reference number, which you will use to pick up the cash. You will then need to show your valid identification to collect it. The details have to match the transaction reference.
Pro Tip: Make sure you have a valid ID when collecting cash from your designated point. Some service providers can bring the cash to your doorstep at an extra cost.
Factors to Consider When Choosing International Payment Methods
Now that you know the different ways to accept international payments, you need to pick what will work best. That means you’ll have to look at various parameters, including the transaction fees and exchange rates.
To receive international payments, you may have to pay fees, which might affect the total amount of money reflected in your account. On the other hand, the person sending the funds may also incur some fees, reducing the amount you’ll receive.
Here are the different transaction fees involved.
- Receiving Fees: These are the fees incurred by the individual receiving funds from overseas. It is your bank that charges the fee to process the overseas payment. Note that this amount varies by bank.
- Intermediary Fees: These are the fees incurred when international payments get re-routed from the sender’s bank to intermediary banks before reaching your bank account. The fee amount relies on the number of intermediary banks involved.
The exchange rate can significantly affect international payments. It can reduce or increase the amount of money you will receive after the transfer process. You can access the current exchange rate on Google, commonly known as the mid-market rate.
However, most banks rarely use the exchange rates on Google. Instead, they add a mark-up fee to the mid-market rate, making them costly. Accepting payments through firms specialized in foreign exchange, like KnightsbridgeFX, can help you save a lot.
With the advent of funds transfer technologies, it is no longer challenging to accept international payments from overseas. You can receive the money through bank transfers, online payment gateways, cash pick-ups, or money orders. However, you must consider the transaction fees, exchange rates, and convenience.