As our world becomes smaller and globalization continues to be a reality for business, the need for international payments and understanding the requirements and nuances of this important service are crucial as your customers’ needs become more frequent and complex. International payments will be a featured series over the next several months, which will provide insight on the benefits of international payments, regulations, and how to protect your business against any risks involved. Keep an eye out for the upcoming articles and learn how to use international payments to help your business evolve and expand.
We are pleased to have Mr. Paul Rechner, MBA, President of Payline by ICE, provide his insights, thoughts, and perspectives on International Payments as part of our Telpay Expert Series.Â
Critical Factors to Consider Before Offering International Payments
Being able to open up options for sourcing products, materials or services from outside of Canada allows businesses a competitive edge, both in terms of variety and potentially cost, but it can come with some intimidating steps including language barriers, customs clearing, foreign exchange accounting and management of exchange rates and payments.
It is crucial, as these needs grow, to understand what payment methods are available to make payment to vendors in different regions and to be able to assess the cost and convenience to find the right mix for your needs. Understand that there are methods that can be convenient for you, but detrimental to your vendors and methods that are convenient for your vendors but costly for you, and ultimately strive for methods that work well for both parties.
Those new to dealing with international payments often tend to use their existing Canadian credit cards, and by doing so, incur merchant fees for their vendors (approx. 2.5%) and are usually paying a markup on the exchange rate of around 3.5%, meaning that there is 6% of the payment value funding the process. This is fine for smaller payments, but adds up when they grow. Similarly, there are online-oriented payment providers like Paypal, that are quick and efficient, but again, can be costly in terms of exchange rates and not suitable for growing payments or for all vendors.