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24 June 2019

FX International Payments How Technological Innovations In International Money Transfers Are Improving Business Efficiency

Summary

It has never been so easy to make international money transfers . The days of having to send paper cheques, which took ages to reach their destination and then had to be processed by local banks, are gone. For many countries, so too are chains of correspondent banks adding time and complexity to international money transfers. Today, money can be sent online to another country in minutes. People can transfer money directly from their bank accounts, or use a credit or debit card. There is no need to visit a bank – money can be sent directly from a mobile device or laptop computer.

Why Faster, More Efficient International Money Transfers Are Important To Business

Many businesses routinely need to send money internationally. These days, supply chains for even quite small companies can cover several continents. A company may deal with businesses in multiple countries, not only for supply of raw materials and parts for manufacture, but also for services such as accountancy and payroll. Some businesses also need to send money to subsidiaries and partners in other countries, or remit profits back to parent companies in other countries.

Procurement has become an international business in its own right, as people and businesses purchase goods and services from vendors in other countries. Online marketplaces feature businesses from all around the world and accept payment by card or alternative providers such as PayPal. If the purchase is in a foreign currency, that is no problem – the foreign exchange will be handled by the card or service provider. Just as it has never been so easy to send money internationally, it has never been so easy to buy internationally.

Many of today’s businesses are “virtual organisations”, with employees and contractors in multiple countries linked by the Internet and telephone. For these businesses – and their workers – a fast, efficient way of making international money transfersis crucial to paying those employees and contractors. Other businesses may use migrant workers, who often remit funds to their families and friends in their countries of origin. Money transfer businesses that offer ways of sending money online safely, quickly and at low cost are a boon to migrant workers and to the businesses that employ them.

Handling cash flow in multiple currencies has become an essential skill for business owners and managers. Online payment service providers give businesses the ability to control when and how to make international money transfers, helping them to manage their foreign exchange exposures and offset incoming and outgoing payments.

 

International Money Transfers To Developing Market Countries

Faster and more efficient international money transfers are not limited to developed countries. They are available for some developing market countries, too. For example, money transfers to the Philippines can be made online, via a mobile device or via a bank, with funds often arriving in less than a day.

Some developing market countries such as India have capital controls. But even here, there are numerous ways of sending money to India, converting pounds sterling to Indian rupees in the process. For example, remittances can be sent via a U.K. or Indian bank,1 or one can use a money transfer service.

 

The Takeaway:

The growth of online and mobile payments services means that international money transfer is becoming faster, safer and more reliable. For businesses, the increased speed and efficiency of online international money transfers offers an opportunity to develop new, fruitful trading relationships in far-off places.

 

Sources

  1. "Transfer your money your way, conveniently", State Bank of India, U.K.; https://www.sbiuk.com/personal-banking/personal/remittances/paying-by-chaps