A Guide for Small Businesses That Receive International Payments

Wednesday, April 17, 2019, 6:00 AM | Leave Comment

Data released by the U.S. government suggests that exports by the United States in 2018 crossed the $1.7 trillion mark, and the country’s imports accounted for over $2.5 trillion in the same year.

While the government and big businesses account for a significant chunk of these amounts, the number of small to mid-sized businesses taking the international route has increased noticeably in recent times.

A number of American small businesses now use the internet to reach out to a wider global audience, and receiving cross-border payments often entails losing some money in the process of currency conversion.

So, how do small businesses receive international payments in the most effective manner?

  • Are Banks the Way to Go?

    Banks have lost out on their share of the international payments pie noticeably after the arrival of several FinTech players. The reason is simple – banks tend to offer less than competitive exchange rates and might also charge steep fees.

    Consider this example. At the time of writing, a leading UK bank is offering £1.2652 against the U.S. dollar. A top overseas money transfer company, on the other hand, is offering a rate of £1.3136 against the U.S. dollar. The corresponding table illustrates how much money you would save if you were to receive a £5,000 payment from the UK to the U.S.

              Bank       Money Transfer Company
    Exchange rate    £1.2652 = $1    £1.3136 = $1
    Fees        £40        £0
    Total money received
    for £5,000     $6275.39     $6,568.00
    Difference               $292.61

  • What About Multi currency Accounts?

    While there are banks that let businesses open multicurrency , their fee structures often leave room for improvement. Fortunately, some FinTech companies such as WorldFirst, OFX, and TransferWise now provide multicurrency accounts for businesses and online sellers. Once you open any such account, you get local bank account details in the form of receiving accounts in different currencies.

    Here’s how a multi currency account works. Say you sell a product to a customer in France. The buyer makes in payment in euros, which goes into your euro-denominated currency. This way, no exchange of currency takes place. You may choose to hold the funds in euros and even use the money you hold in different currencies to transact. When you choose to withdraw funds into your local bank account is essentially up to you.

    The TransferWise Borderless Account comes with free receiving accounts in USD, GBP, EUR, and AUD. With the WorldFirst World Account, you get free receiving accounts in USD, CAD, GBP, EUR, and AUD. The OFX Global Currency Account provides free receiving accounts in USD, CAD, GBP, EUR, AUD, and HKD. Using these accounts to receive international payments gives you the ability to receive and hold funds in multiple currencies.

  • Forex Hedging Tools

    Small businesses that need to make international payments may benefit by taking a look at the different hedging tools offered by overseas money transfer companies. If you wish to make a payment in the future at the existing exchange rate, you may lock the rate for a predetermined time period by opting for a forward contract. If you wish for the exchange rate to reach a better level before making a payment, you may consider going the market order way.


There is no reason why small businesses cannot benefit by turning to specialist money transfer companies when making or receiving international payments. What also helps is that their clients stand to benefit too, through increased cost-effectiveness and a more streamlined process.

About the Author

Jon works as a researcher with iCompareFX, a website that simplifies how people compare leading overseas money transfer companies from different countries. Outside of work, Jon likes cycling and listening to music.

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