Cross-border fee is simply a fee that you need to pay to a payment processor each time you send money abroad. Money transfer operators, banks and payment gateways are businesses too, so they need to make money to offset the cost of setting up the connection between your business and your recipients. This cross-border charge is a cost that can add up, especially if you operate a global business and often need to send funds abroad.
Imagine this. You run a successful local store in the US selling handmade cards. You source for raw materials abroad, and many of your suppliers reside in different countries. To pay them, you may need to engage a bank, which may not have access to all countries and needs to ride on a money transfer operator, like Tranglo, into those countries. The money transfer operator will charge your bank a cross-border fee to account for its involvement.
This can mean administrative processes like currency conversion, risk assessment and network building. Your bank may then charge you a fee for using its service, albeit with a slight markup in price. The above is just a simple and direct scenario. Imagine having to pay to many different countries and many different third-party payment processors. With each additional company connecting your payments, you will end up paying more and more.
How to get the most out of your cross-border fee?
If your business needs a cross-border payment solution that is flexible and can be customised to your needs, consider having third-party specialists like Tranglo take charge of your payments. You often hear a marketing slogan that goes: “do more with less”. This is exactly how these cross-border payment hubs operate. They generally have automated systems that can process single or bulk transactions, and have the partnerships, network and integration in place (they are specialists compared to banks, which have other business commitments) to optimise cost.
By engaging such a firm, you are likely to save on cross-border charges because you are paying only one company to handle your payments. Keeping track of cross-border transactions and fees is important. Having a clear picture of how much your business spends on paying abroad allows you to balance the needs of your customers and the capacity of your operations.
Talk to us to know more.