What is the best international payment method?12 min readReading Time: 5 minutes
International financial operations and international payments are increasingly common. This means that the market offers numerous possibilities to perform this service. Therefore, it is essential to know about them to make the right decision and pay fair rates.
Although it seems like a simple choice, the processes are quite varied, especially when it comes to fees and deadlines. After all, they are factors of great influence on the final value and all financial planning.
If you want to make international payments and have questions about it, don’t worry! In this article, we’ll show you four ways to make international payments with peace of mind. Check out!
International payments: increasingly necessary services
The world is increasingly connected and without borders for relations between countries, whether for individuals or companies. Because of this, there are many needs to maintain financial contact abroad, opening up opportunities and new possibilities.
Those who do business abroad and need to receive or make international payments must choose safe and economical ways to carry out transactions. This is largely due to exchange rate fluctuations, which can make your money worth less when converting currencies.
Therefore, knowing the modalities of international payments is essential for companies that operate or intend to operate in foreign trade.
Continue reading this article to learn how to maximize your results by choosing the best international payment method. Here we will talk about four international payment methods: Payment in Advance, Bank Slip, Letter of Credit, Cash Against Document. Check out:
1. Payment in Advance
Payment in Advance, as the term already makes clear, is when the importing company pays in advance for the goods.
In this case, the exchange contract is the responsibility of the exporter, who must arrange it with a financial institution — which will make the payment after receiving the amount from the importer.
Although it involves a certain risk, as the goods may not be delivered, this is one of the international payment methods most used by companies that want to guarantee a lower conversion rate.
When the currency tends to devalue in the medium and long term, this is the best way to save.
2. Bank slip
Bank slip is indicated for those who want to make payments quickly and without bureaucracy. In this modality, the operation is similar to paying a common bill in local currency.
An exchange agency should intermediate the operation, carried out on two fronts. First, the importing company pays in local currency, generating a value corresponding to the foreign currency according to the exchange rate of the day. Then, this converted value is passed on to the exporting company, with a fee being charged for the exchange operation, in addition to taxes according to the rule of each country.
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3. Letter of Credit
Quite widespread in international trade, the letter of credit is widely accepted by agents who operate with import and export. The reason for the greater receptivity is that, compared to other forms of financial transactions, it offers the most guarantees.
In short, when companies choose to pay by letter of credit, they put a bank between them that will determine the terms of payment and receipt. Only if all the requirements are met will the deal go through — which represents much more guarantees, especially for those who make the payment.
4. Cash Against Document
Documentary collection is one of the most bureaucratic methods for making international payments. With it, exporting and importing companies close deals based on the transfer of documents required for sending and receiving goods.
This documentation goes through the banks — in the countries of the companies that carry out the commercial transaction — for verification, where they are checked by the respective customs authorities.
Only after the entire documentary verification process is the release of the money made. Thus, it is one of the most complex payment methods, but at the same time the safest.
4 tips on international payments
As you have seen, the financial market offers several options for making international payments, from the most traditional to the modern ones. There are so many aspects and details that doubt prevails: how to carry out the operation safely?
See very important tips and the care you should have!
1. Assess the total cost of the transfer
The lower your spending on the transaction, the greater your benefit. The problem is that these costs are not always clear. Promotions are often carried out in which the discounted value is embedded in the exchange rate, for example.
To avoid this problem, pay attention to the currency quote type. When it comes to tourism exchange, be aware that there is a profit margin added to the commercial.
Also, evaluate the fees charged for communication between banks and those charged to receive international payments. By considering all these amounts, you avoid losing your profit margin.
2. Please consider the shipping time
International operations providers have different shipping times. See what is the deadline informed by the bank after the end of the documentation process, the elaboration of the exchange contract, and the approval of the remittance. Remember to factor the time zone into this calculation.
3. Review international payment security
Any transaction implies extra care since fraud and data theft unfortunately can happen. To avoid it, some recommendations are suggested.
- carry a large amount of cash;
- deal with unfamiliar individuals or companies — if so, seek recommendations;
- opt for operators that offer unmissable promotions.
In any case, it is important to obtain information about the operator. Make sure it operates according to your country’s Central Bank rules.
4. Check international payment methods
There are different options when sending money abroad. To ensure your satisfaction, review not only the fees charged, but the institution’s reliability and deadlines to complete the process.
As you can see, there are different ways to make international payments, each with its advantages and bureaucracies. Therefore, analyze the profile of the organizations involved and the import and export situations, before choosing which is the best option for your company.
Speedy.io: like a bank, but better.
Now that you already know what is the best international payment method, how about getting to know Speedy.io?
We are here to contribute to the day-to-day of your company!
Speedy.io payment account offers:
- Dashboard for managing and controlling your charges;
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- Your client chooses how to pay the invoice or invoice, which can be via credit card, PIX QRCode, bank transfer, PEC Flash, or cryptocurrency;
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Speedy.io helps you manage your finances while you focus on what matters most: delighting your customers.
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