What’s more, in an increasingly global marketplace, it is also important for online merchants and retailers wishing to compete across currency borders to make it as easy as possible for their customers to pay in their local currency. Therefore, it is essential that businesses have access to low-cost methods for international payables as well as the ability to offer their customers’ preferred currency choice for online, cross border purchases.
Centralising international payables
To fully implement an international business strategy may require an ‘in-country’ presence for some countries for processes such as creating payroll processing requirements or settling overseas supplier invoices. If businesses wish to operate centralised governance, they need to identify the optimum approach to ensure certainty of payment delivery in the most cost effective manner.
“In our experience, it is very common for a company’s banking provider to offer selective payment delivery solely utilising international wire transfers; however, there are other more secure, reliable and robust alternative methods to deliver an international payment,” explains Andy Brown, Operations Director for Equiniti International Payments. “It should also be remembered that regardless of whether payments are sent as an urgent or standard wire, these are the most expensive and unreliable methods of making international payments, in terms of final delivery amount.”
In January 2008, the Single Euro Payment Area (SEPA) Credit Transfer was introduced and EURO payments into 33 countries are now available via this payment delivery method. Andy says:
The benefits of SEPA payments compared to wire transfers are threefold: consistent and lower transaction fees; guaranteed final payment delivery amounts, unless agreed otherwise between the beneficiary and their bank; and credit into the destination bank account is within one business day.
The optimum alternative to making international payments via wire transfers is to use the Automated Clearing House (ACH) payment network, available in around 30 countries. This payment method removes the involvement of intermediary banks, which in turn removes additional and sometimes unknown charges from the payment process. The UK BACS payment process is the UK’s own local batch payment network and processing international payments via an ACH is the closest solution to UK BACS.
Controlling currency exposure
Consumers now have an almost infinite choice when electing to buy their goods online; ensuring that consumers understand the price of the goods they are purchasing and they are confident that there are no hidden costs is vitally important to remaining competitive. Giving consumers a guaranteed price in a currency they understand has proven to lead to fewer “shopping cart” abandonments and hence increased sales.
Even in the face of this, businesses are often reluctant to make the leap into selling internationally in local currency. A lack of understanding, a fear of increased operational burdens and a desire to avoid currency risk are powerful disincentives for businesses. This can hinder growth and prevent retailers from thriving when faced with local competition.
In recognition of consumer demand and the challenges that businesses face when selling internationally online, Equiniti have developed Equiniti Multi Currency Pricing (MCP). “Equiniti’s MCP solution is an innovative service that allows businesses to price goods and services in a number of alternative currencies, while continuing to receive settlement and reporting in their home currency,” explains Tom Longhurst, Business Lead for the Equiniti MCP product. He continues:
Businesses are now able to access all of the benefits of local currency pricing: increased conversions, greater customer loyalty and significantly greater competitiveness, all without the need to actually handle foreign currency.
Where traditionally businesses would have had to set exchange rates, open international currency accounts, manage the foreign exchange risk and incur further costs, Equiniti MCP removes these barriers. This solution breaks the link between the card issuers and acquirers in the normal process, offering businesses an additional revenue stream. Tom adds: “Whether a business is new to selling internationally online or more established, this service offers the opportunity to reduce costs and develop competitive advantages for their business in the increasingly competitive international marketplace.”
E-Zine issue: May 2015