Small businesses that needed to make or receive international payments had to deal with high costs, extensive paperwork, and long processing times until not so long ago. This was when access to the institutional foreign exchange market limited to banks, governments, and large businesses.
Now, technological advances have ensured that small and mid-sized businesses can avail of quick and cost-effective services. What makes matters even better is they get to choose from a number of specialist money transfer companies.
Why Are Banks No Longer a Good Bet?
If your business uses a bank for sending money overseas or receiving international payments, you will, in all likelihood, pay a currency exchange fee every time. With frequent payments, the cost tends to add up rather quickly.
Consider this—you receive the equivalent of $5,000 from an international client every month, and your bank charges a 2% fee for changing the foreign currency to U.S. dollars. In one year, you’ll end up paying around $1,200 as exchange fees. What if you also have to make payments for work you outsource to another country?
Multicurrency Accounts
A multicurrency account works quite like a regular checking account with one big difference. It lets you hold funds in multiple currencies. While most big banks in the UK and Australia offer multicurrency accounts, they are not as common in the U.S. Besides, the fees you’ll need to pay to maintain your account and exchange currencies are typically high.
Fortunately, some specialist find transfer companies have started offering multicurrency accounts for small and mid-sized businesses, giving them the ability to save money through minimal fees and competitive exchange rates. Depending on where your business is located, you may consider opening a multicurrency account with companies such as TransferWise, WorldFirst, and InstaReM.
How These Accounts Work
Multicurrency accounts work in the same basic manner, and you may apply for one as a small or mid-sized business, an online seller, or a sole trader. Some of these accounts are available for freelancers as well.
Upon opening a multicurrency account you get local bank details, or receiving accounts, from different countries. The popular ones include the U.S., Canada, the UK, Europe, and Australia. These accounts fall under a single umbrella and give you easy and cost-effective means to receive payments in matching currencies. A multicurrency account typically let you hold funds in multiple currencies, so making cross-border payments becomes simpler and more affordable.
The TransferWise Borderless Account comes with receiving accounts in:
- The U.S. (USD)
- The UK (GBP)
- Europe (EUR)
- Australia (AUD)
With the WorldFirst World Account, you get receiving accounts in:
- The U.S. (USD)
- Canada (CAD)
- The UK (GBP)
- Europe (EUR)
- Australia (AUD)
Depending on the company you register with, you may add funds to your account using bank account transfers, debit cards, or credit cards. You get to decide when to withdraw funds into your local bank account. When you do, you get to benefit through competitive exchange rates.
Conclusion
The road ahead is filled with challenges for specialist money transfer companies. Ones that are relying on technology to better their offerings are forcing others to become more competitive. For small businesses that deal within the quickly growing global marketplace, the going is only going to get better.
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