Business Insight
A Comprehensive Guide to Cross-Border Remittances
Understanding the Ins and Outs of Sending & Receiving Money Abroad
Cross-border remittances are becoming increasingly important as more and more businesses now operate on a global scale or look to expand globally. With the rise of digital payments, international money transfers have become easier and faster than ever before. This article will focus on cross-border remittances, explain how they work, and provide you with the necessary details to make an informed decision. We hope to give you a better understanding of this process.
Table of Contents
What is Cross-Border Remittance and How Does it Work?
Understanding the Different Types of International Money Transfers
。Wire Transfers
。Online Payment Services
。Payments with Stablecoins
What Makes Cross-Border Remittances So Costly?
。Foreign Exchange Rates
。Transaction Fees
。Correspondent Bank Fees
What to Consider When Choosing the Best Money Transfer Service for You
。Costs
。Speed
。Business Hour
。Transparency
。Security & Compliance
ConclusionWhat is Cross-Border Remittance and How Does it Work?
Cross-border remittance is the process of transferring money from one country to another. It is a convenient way to send money abroad and can be done online, through banks, or through specialized money transfer companies.
The process of cross-border remittance involves the sender providing their bank details and the recipient’s bank details. The sender will then transfer the funds from their own account to the recipient’s account in another country. Depending on the location of both parties, this process may take a few hours or days.
Cross-border remittance has become increasingly crucial as more and more businesses seek global expansion and partnerships with international suppliers/distributors. In addition to traditional bank wire, online money transfer services can help you send money quickly and securely. Read on to learn more and save yourself the hassle of going through lengthy paperwork or waiting for weeks for your transactions to complete!
Understanding the Different Types of International Money Transfers
Compared with domestic transfers, international money transfers can be a relatively daunting task. With so many different types of money transfer services available, it can be challenging to know which is best for your needs. When making payments for international business transactions, understanding the different types of international money transfers can help you make the right choice.
Wire Transfers
A wire transfer is a method of electronically transferring funds from one bank account to another, commonly used for both domestic and international transfers. Wire transfers can be initiated online through a bank or financial institution or in person at a bank branch. To complete a wire transfer, the sender must provide the recipient’s bank account information, including their name, account number, and routing number (only when sending payouts to the U.S.). Depending on the banks and the country in which the account is located, international wire transfers can take 2–5 business days and incur transaction fees.
Wire transfer comes with both advantages and disadvantages. On one hand, they offer a secure way to send money across the world with relative ease. On the other hand, there may be various fees associated with wire transfers which can add up over time, and the waiting time can be too long to be acceptable in today’s fast-paced business world. That’s why people started to seek alternatives to global transfers through banks.
Online Payment Services
As internet coverage expands widely, online payment services have gained popularity to make payments and transfers without physically visiting a bank or money transfer service. With online payment services, users can send and receive money from anywhere in the world with just a few clicks.
Online payment services seek to provide faster, better, and cheaper cross-border remittances than traditional ways. These innovative attempts offer several advantages such as global transfers, automated payouts, and secure transactions with more affordable fees. Potential risks, however, do exist. Users can get into trouble in cases of fraud or financial crimes, which makes it essential that service providers take correspondent measures to ensure the security of user transactions and prevent crimes.
Payments with Stablecoins
In the digital age, digital payments have become a must-have in today’s world. They offer convenience, speed, and security for individuals and businesses alike. With the emergence of “stablecoins,” digital payments have become even more secure and reliable. Stablecoins are mostly cryptocurrencies pegged to a fiat currency, such as the US dollar, making them ideal for business use. They provide stability and security to users, as implied by the name, without the volatility of other cryptocurrencies.
The use of stablecoins for payments has been growing rapidly in recent years, with USDC being one of the most popular stablecoin payment methods. With governments and authorities working on the regulatory frameworks, asset-backed stablecoins, like USDC, which is regularly audited, will thrive in a regulated environment. It is a secure and efficient way to send payouts, without having to worry about the volatility of cryptocurrency, transaction fees, or settlement time associated with traditional payment methods.
What Makes Cross-Border Remittances So Costly?
Cross-border remittances are a costly endeavor, with many factors playing a role in the overall cost of the transaction. The main costs associated with sending money abroad include foreign exchange rates, transaction fees, and correspondent bank fees. These factors can make cross-border remittances through bank wire more expensive than other types of payments.
Foreign Exchange Rates
Exchange rates are a fundamental part of global trade. Companies must consider the cost of exchanging currencies when doing business abroad, as this can significantly affect the profitability of their operations. Banks are often the most common source for exchanging between fiat currencies, but digital payment services are becoming more popular as they offer better exchange rates than traditional banks as well. Understanding foreign exchange rates is essential for businesses to make informed decisions and maximize profits.
Transaction Fees
Transaction fees are charges that banks and payment services apply when you send or receive money; they can vary depending on the type of transfer and the countries involved. These fees can quickly accumulate, especially for cross-border payments through bank wire, so it is important to understand these fees before initiating any kind of payment so that you know how much it will cost you in the end. Or, by finding an alternative payment system, organizations could significantly reduce these fees and save on expenses.
Correspondent Bank Fees
If you are a global business or you collaborate with suppliers from other countries, you’re probably quite aware of the correspondent banking fees. Essentially, these are charges that banks collect when transferring money between accounts for international money transfers.
When handling cross-border remittances, banks are limited in the number of countries they can directly transfer money. To send funds to other countries, they have to use correspondent banking services. This allows them to provide their customers with the same reliable service regardless of where the money is being sent.
Cross-border payments often involve just one correspondent bank, but in some cases, a second or even third one may be needed if the destination country is farther away. Each institution then charges the sending bank for their services, which can result in hefty fees.
These are the primary fees associated with sending international payouts. We are confident that you have a basic understanding of the various payment methods for global transactions. Now, let us guide you through the criteria for selecting the ideal payment method!
What to Consider When Choosing the Best Money Transfer Service for You
Sending money across borders can be a challenging process. With so many money transfer services available, it can be difficult to decide which one is the best for you, which is why it is vital to take into account the factors that influence your experience. Money matters, no doubt about it! Let’s take a look at the costs first and then dive into other criteria such as speed and transparency
Costs
The cost of online payment services can vary significantly depending on the provider and the features they offer. It is important to compare different providers and their features before making a decision. This comparison should include factors such as transaction fees, setup costs, and monthly fees. By researching these factors, you can make an informed decision about the best online payment service for your needs.
Speed
Payment services have different settlement time frames, but online providers with cutting-edge technology often offer an advantage in terms of speed. If you are looking for faster payment options that let you settle in as little time as possible, innovative services provide some of the best same-day or even real-time transaction solutions. Try services such as OwlPay to enjoy same-day settlement in fiat currencies. For forward-thinking businesses, OwlPay can even enable settlements within seconds when sending payouts with stablecoins through blockchain.
Business Hour
Making payments at physical banks may be easier with personnel guiding you through the process, but going to banks will soon become a tedious, time-consuming task. In addition, the business hours of banks or financial institutions may not align with your fast-paced business; this is where online payment services come in handy. Reliable and trustworthy payment service providers allow you to initiate payments anytime, anywhere.
Transparency
The digital age is characterized by a higher emphasis on transparency, making it an essential component of any business. Consumers and businesses alike are looking for solutions that allow them to securely and transparently transfer money with ease. Blockchain payments, such as stablecoin payments, provide a secure and transparent way of doing so.
Stablecoin payments are gaining more traction in recent times due to their low fees, fast settlement times, and high level of security. They provide an alternative to traditional bank wire transfers which can often be slow and expensive. Blockchain technology has revolutionized the concept of record-keeping and transaction security. It is something that was not thought possible in the past, but now it is available to users to track immutable records and remain assured about the safety of their transactions.
Security & Compliance
Something you should never forget is security and compliance. A key concern for businesses today is compliance with regulations and industry standards such as Anti-Money Laundering (AML) and Know Your Customer (KYC) are essential to ensure the safety of transactions. Businesses are strongly recommended to take proactive measures to protect their data from potential threats, while also ensuring compliance with all applicable laws and regulations. When selecting a payment service provider, make sure to assess their introduction process carefully. Opt for one that values security and puts the protection of your funds as a top priority.
Conclusion
Cross-border payments may seem intimidating in the past, but now we can leverage online payment services developed with innovative technology. It saves time, costs, and the hassle of going to a bank branch for the lengthy process.
With so many remittance services available on the market, it can be challenging to make an informed choice when deciding which is best suited to your needs. To help you decide better, we’ve highlighted the major types of money transfer services and listed the factors that must be taken into consideration when making a choice. Identify your priorities and give the newest technology a try to unlock its potential!
Ready to Use Stablecoin Payments? Try OwlPay!
Technology and digitalization are prevalent topics for businesses. Besides order management, an integrated payment service platform, like OwlPay, can help reduce your transaction costs and speed up cross-border remittances for your business. OwlPay allows you to enjoy the benefits of global transfers with USDC to streamline your order and supplier management, reconciliation, and payment processes.
If you feel that an affordable, fast, and transparent payment service is what you want for your business, please contact us; we’re happy to look into your operational needs to design a payment solution that is specific to your unique needs, just like we have for our clients.
Sign up for OwlPay today to experience real-time settlements & get our limited-time offer, a fantastic 15% discount for your first year!
→ http://bit.ly/3T2wz0v
Contact OwlPay team & learn more about the special offers and solution tailored to your needs: http://bit.ly/424A4HN
【About OwlTing Group】
Founded in 2010, OwlTing Group covers B2B, B2B2C, and B2C services. As a Taiwan-based company, OwlTing has branch offices in the U.S., Japan, Thailand, Malaysia, Hong Kong, and Singapore, and seeks to expand globally. In 2018, OwlTing announced an eight-figure USD investment from the Japanese financial giant SBI Group. In recent years, OwlTing has formed partnerships with government agencies, industry, and academia globally and applied blockchain technology to the FinTech industry, medical industry, automotive industry, defense industry, food industry, forestry, agriculture, etc. OwlTing aims to build blockchain services for various industries to solve pain points and improve industry ecosystems.
OwlTing Group: http://bit.ly/3ZxR9bo
OwlPay: http://bit.ly/3T2wz0v
Contact Us: owlpaysupport@owlting.com
