Consultants Oxford Economics have estimated that
international trade is currently worth more than £700 billion to the UK. The
small and medium-sized enterprises (SMEs) it has surveyed forecast a growth in
their cross-border trading of between 40% and 66% in the next three years. The number
of SMEs that do business in at least six foreign countries will increase by
some 129% over that same timeframe.
If you are not already doing so, the chances
are that you may soon be making overseas payments in your business.
In the fairly recent past, it was a
relatively complicated and expensive process transferring money overseas. These
days – thanks largely to the innovations made by a growing number of fintech
companies – international transfers abroad have become more
transparent, convenient, efficient, and cheaper.
When it comes to business money transfers,
the old guard remains. These are the banks, foreign exchange brokers, and money
transfer companies respectively.
Although high street banks have traditionally
arranged such transfers, many of the processes – especially the charges and
commissions – have remained opaque. Customers may have been uncertain about the
rate of exchange being used and became aware of the charges and commissions on
any transfer only after the event.
Although foreign exchange brokers were
typically relied upon to offer a more competitive rate of exchange, their
services were generally reserved for businesses looking to make relatively high
That left money transfer companies to handle
the volume of smaller transactions – although the costs of these remained high.
Fintech banks and start-ups
The scene has been changed quite dramatically
by a number of fintech companies specialising in payments processing and
business money transfers overseas. By exploiting the potential of digital
platforms and mobile apps, they have quickly emerged as the champions of
faster, more convenient and cheaper money transfer solutions.
Technological innovation and creativity have
driven the competition. New ways of doing business have emerged in the field of
international money transfers.
For example, some money transfer services do
not need to rely on money actually leaving the country for an international
payment to be made.
Instead of acting on a transfer instruction
by sending money directly to the intended recipient, the funds are redirected
to the recipient of an equivalent sum travelling in the opposite direction.
Potential costs and losses on the rate of exchange at either end of the
transfer route are thereby cleverly avoided – transparent, fair and
cost-effective business money transfers are achieved in both directions at
This is just one example of the way in which
digital platforms have been employed to create innovative ways of achieving the
same ends – safely and securely transferring money across borders from one
business to another.
Innovation has created other cost-effective
ways of securing your business money transfers. A careful comparison of the
various competing systems, apps and online processes currently available may
help you home in on the method or methods suited to your particular business.