Getting deep into e-commerce has been on the list of best ways to make money online in 2020 even before the pandemic. However, this crisis pushed the benefits of becoming an online merchant to a whole new level. While the majority of industries are in a slump, e-commerce has grown by 76% already. The preference for buying online has been steadily increasing over the past decades. But now the consumer behavior has changed significantly. And it’s definitely not going back, so selling online will remain a good money-making strategy.
Selling online internationally should bring even more money because limiting yourself to a local market makes you exposed to extremely intense competition. Going global is the way to go not only to reach more prospective customers. It’s also what you should do to cut many costs. For example, buying supplies or goods, or outsourcing parts of the production process, can all be much cheaper abroad.
But going global also exposes you to the foreign currency exchange (FX) risk. And international money transfers can be expensive, so they will bite into your profit margin. That’s unless you use the right kind of money transfer services that can minimize these losses for you.
How Much Money You Are Losing on Currency Exchanges (& How to Stop Doing It)
Amazon’s built-in payment solution with the Amazon Currency Converter for global sellers cost you about 3-4%. Every international payment on PayPal costs 5% of the transaction volume. Bank wire transfers could be even more costly, up to 7-10%. Therefore, they definitely aren’t an option for a small merchant that wants to make a profit from selling globally.
Main losses on international payments for you come not from the fees but from currency exchange rates. Amazon, PayPal, and banks all use high FX margins. This means that the exchange rate you get is very unfavorable.
The solution is to use online money transfer companies that specifically focus on offering the lowest FX rates. Also, the majority of them charge no transaction fees or keep them very low. Therefore, the cost of a global payment gets cut to 1% or even less. And the majority of these companies offer easy-to-use apps. So you’ll be able to manage your account from your smartphone.
Before you start researching the best currency transfer apps for merchants, you also need to know another advantage they offer. As an online seller, you will appreciate the fact that these companies do not only help lower your costs. They also help reduce the risks for your business.
Being a global merchant makes you vulnerable to changes in FX rates. These changes can be rapid, unpredictable, and completely devastating for your business. Due to the global economic recession we have today FX markets are extremely volatile. Therefore, this risk is huge.
However, online money transfer companies offer hedging tools to their customers. You can use those to avoid losses on FX rate changes in different ways. You should check what kind of hedging tools the company offers before making your final decision on an FX company.
Top Online Money Transfer Companies for Merchants
WorldFirst
WorldFirst is definitely among the best money transfer companies for merchants specifically. This is because the UK money transfer company now belongs to Ant Financial, which is a part of the Alibaba Group.
The company offers a wide range of services that benefit online merchants specifically. It also uses fixed FX margins and the lowest currency rates on the market today.
OFX
OFX is a money transfer app for merchants and small businesses with a truly global reach. It’s one of the industry veterans and is very trustworthy. The company offers low FX margins and it accepts payments from both debit and credit cards.
There are 115 OFX bank accounts worldwide. This means that wherever possible, the company cuts the transfer costs to the absolute minimum by making local transactions.
TransferWise
TransferWise is the biggest FX company today and it’s very useful for merchants due to its popularity. Moreover, it has no minimum payment requirements. Therefore, it’s a good choice for small online purchases.
TransferWise has fixed FX margins that are rather low. It also has some of the lowest fees and FX rates in the industry. The company is fully transparent and you can easily check the cost of any transfer on its website.
Currencies Direct
Currencies Direct has a great app and a wide reach. However, it’s even more important that this money transfer company doesn’t charge any transfer fees. It has rather good FX rates and 22 offices worldwide.
Overall, Currencies Direct is for merchants and businesses that want to work on a bigger scale.
Currencyfair
Currencyfair is a money transfer company that’s great to use for transfers of all sizes. The cost will vary depending on the volume, but it will always be one of the best on the market.
This is one of the newer FX companies that’s very innovative. The biggest advantage of Currencyfair is that it offers good FX rates even for very small transfers. It also doesn’t have a minimum transfer requirement.
Benefits of Using Online Money Transfer Companies for Merchants
The use of fintech has increased by 72% since the start of the pandemic, and that’s in Europe alone. Online merchants definitely help drive those numbers as they have a lot to gain from using tech. Today, using FX apps is a great help if you want to go global. And selling globally is a must now when the e-commerce is booming to unprecedented levels.
FX money transfer apps increase your profit margin from every single international sale. They also reduce your risks by giving you easy access to hedging tools. Most importantly, they are very easy to use. Also, both you and your buyers can do this without exposing your bank accounts to unnecessary risks.
And don’t forget the biggest advantage of using money transfer companies for merchants. Many of them offer a service called collection accounts. This is a multi-currency account that allows you to accept and make transfers in many currencies with minimal FX losses. Moreover, it allows you to hold balance in many currencies. Therefore, you can cut your losses further by foregoing exchanges for some transactions completely. For example, you can do this if you need to make a payment to a supplier abroad.
The benefits of using online money transfer companies are undeniable. You only need to choose which of them will work best for you.
