According to data released by Statista, the number of online buyers globally has increased from 1.32 billion in 2014 to 1.66 billion in 2017. The number is expected to cross the two billion mark by 2020. Therefore, it is not surprising that an increasing number of businesses and individuals are turning online to try and sell their products and services.
Tapping into the international market to can be a great way to grow a business, but having to deal with unfavorable exchange rates and paying steep transfer fees can eat into profits. To make the most of the payments that you receive from international customers, it is important that you pay attention to some crucial aspects.
Using Your Bank
Leading banks in most countries give their customers the ability to maintain foreign currency accounts. For example, you might live in Australia and have a USD-denominated bank account with an Australian bank. In this scenario, you may receive payments from your American customers directly into your USD-denominated Australian bank account.
However, the exchange rate that applies when you transfer a foreign currency into a local currency depends on your bank, and more often than not, it leaves room for improvement. In addition, there is a good chance that you will need to pay a transaction fee each time you receive a payment.
Some banks offer multicurrency accounts. These accounts give you the ability to hold funds and transact in multiple currencies. As with single foreign currency accounts offered by banks, these are not the most cost effective alternatives.
Using an Overseas Money Transfer Company
The online marketplace you use notwithstanding, using the services of specialist money transfer companies is typically more cost effective when compared to banks. Leading companies such as TransferWise, World First, and OFX now provide multicurrency accounts for online sellers from different countries. With these accounts, online sellers receive free receiving account details in different currencies, so they may make and receive payments just like local businesses.
- TransferWise. The TransferWise Borderless Account comes with free receiving accounts in USD, GBP, EUR, and AUD. In addition, you may use the account to hold funds and transact in more than 40 currencies. The TransferWise debit Mastercard gives you easy access to money in your account.
- WorldFirst. With the WorldFirst World Account, you get free receiving accounts in USD, GBP, EUR, AUD, CAD, CNY, and JPY.
- OFX. If you register for the OFX Global Currency Account, you get free receiving accounts in USD, GBP, EUR, AUD, CAD, and HKD.
Where Can You Receive Payments From?
Where you may receive payments from depends on whether you use an online marketplace, a payment gateway, or receive money directly from your customers. The company you work with also has a bearing on this aspect, as do any applicable trade sanctions. For example, receiving payments from overseas customers for online sellers in Iran continues to remain a challenge.
Benefits of Online Multicurrency Accounts For Online Sellers
Online sellers may benefit by using online multicurrency accounts to receive payments from international customers in different ways.
- The cost factor. A typical online multicurrency account is free to open and does not come with ongoing account maintenance fees. Receiving payments into your account does not attract fees. When you receive payments in accounts held in the same currencies, you avoid paying currency conversion fees. The fees you need to pay when withdrawing money into your local bank account are usually nominal. You also benefit by getting competitive exchange rates.
- Transact in multiple currencies. You get access to bank account details from different countries. In addition, you also get to hold funds and transact in a range of currencies.
- Withdraw money at any time. When you choose to withdraw money from your online account into your local bank account is entirely up to you. This gives you the ability to wait for the exchange rate to swing in your favor.
- Make payments, While these accounts give you easy means to receive international payments, you may use them to make overseas payments as well. When you make payments from matching currency balances, you avoid paying currency exchange fees.
Online sellers no longer need to suffer because of poor exchange rates or high transfer fees. With different multicurrency accounts there for the taking, finding one to suit your needs is fairly easy. All you need to do is compare your options well.