Whether you are a small business firm engaging in export and import or a billion-dollar organization dealing with multiple nations and currencies, you need to understand how foreign exchange transfers work.
The needs and requirements of both the above-mentioned businesses will be different. Smaller organizations might be on the lookout for simple, easy and efficient transactions. Bigger businesses and their CEOs might be on the lookout for specialized hedging advice.
In all this, one thing is for certain- every business owner or executive is worried about currency fluctuations. Working in local currencies, accepting foreign currencies, factoring in the conversion rates, understanding hidden charges, etc. are all complicated.
In this article, we are specifically going to focus on APAC businesses. We look at some reasons why banks and traditional financial institutions are not the best bet when it comes to corporate foreign exchange transfers.
We also discuss some of the leading currency transfer specialists that are helping businesses of all scales and sizes optimize their foreign business dealings and payments. Finally, we end by discussing why many still prefer banks in international money transfers for businesses.
The Problems of Traditional Banks in Corporate Foreign Exchange Transfers
There is a reason why traditional banking institutions have never been able to offer the best experiences as far as foreign exchange transfers work. Let us now look at some of them in this section-
1. Overcharging Businesses
The first major bone of contention is the fact that banks overcharge as far as international money transfer for businesses is concerned. They have a host of hidden charges and commissions, that eat into the payments, revenues, and profits of businesses. The worst part is that they do not offer any transparency or clarity in this regard to the businesses.
2. No Additional FX Services-
In today’s world, businesses in the APAC region are looking for more than just money transfers. They are looking at effective fx management solutions. This means things like dedicated dealers, multi-currency accounts, options for hedging, and insurance services for larger payments and options. Unfortunately, banks are unable to help in this regard.
3. Time Delays and No Intimations-
One of the biggest problems that plague banks in terms of corporate foreign currency transfers is the lack of tracking international payments. This can be highly frustrating for businesses and affects their cash flow and other projections. You are never going to get a definite answer from the banks and this causes irreparable damage when you have to pay vendors and suppliers.
Banks and traditional lenders have not been able to upgrade their capabilities as far as business currency exchange works. They have fallen miserably behind corporate money transfer specialists.
4. Corporate Currency Transfer Specialists: Who are they and what do they do?
There are two major ways you can send and receive international money transfers from abroad. The first one is through traditional banks (we have already discussed some of their major shortcomings in the last section). The second and more preferred option is by using currency transfer specialists.
These are companies whose sole aim is to provide a fast, safe, affordable and efficient platform to help you with corporate currency transfers. With rapid advancements in technology, these platforms use a Peer-To-Peer payments model.
For businesses in the APAC region, the following are some of the major corporate currency transfer specialists that you can go for-
- OFX
- TorFX
- AirWallex
- Halo Financial
- MoneyCorp
- Wise
- XE
- Skrill
- Xoom
- Azimo
You might be thinking why we have not added PayPal, Western Union, or Money Gram to the list. The answer is simple. While these companies are supposed to facilitate international transfers by being affordable, they charge higher fees and commissions.
Why Businesses in APAC should use a Foreign Exchange Transfer Specialist?
In this section, we are going to list down three major reasons why businesses should start using specialists in place of traditional banks for foreign exchange transfer.
Reason 1: This is the only thing they do and they are good at it!
As compared to banks that offer hundred different services and dilute the importance of foreign transfers, currency specialists do not do that. This is their sole business and dedicates time, effort, and money to making sure that they are able to cater to their clients in the best possible manner. Customer experiences matter for these platforms and this reflects in the value they provide.
Reason 2: They are far more affordable and transparent than banks!
Most of the companies that have been listed above take great pride in being transparent. Not only do they offer complete disclosure on what they will be charging as commission fees, but they also ensure that businesses get the best deal. You can compare this with the bank rates and you will find that it is significantly lower. Businesses do not end up suffering financially.
Reason 3: It is a fast, safe, and more effective way of transferring money internationally!
Working with a bank to secure international payments means you have to invest in tons of paperwork. This means that the process becomes unnecessarily complicated. All these problems are not something that you are going to experience with foreign currency transfer specialists. This is a fast, safe, and much more efficient way to transfer funds internationally.
Why do APAC Businesses still prefer Banks over Foreign Exchange Transfer Specialists?
You might be thinking that given the problems banks have in this specific issue, APAC businesses would look to avoid them. While there has been some change in this regard, currency transfer specialists are not finding favor with businesses.
The question that we need to ask ourselves is why? The following can be some of the probable answers in this regard-
- Firstly, there is a lack of knowledge and awareness of these specialists. For older family-run businesses, understanding how these digital payments work is still a complicated phenomenon.
- Secondly, as banks handle most of the current account dealings of businesses, having one place to manage all your domestic and international payments might make sense to many businesses.
- Thirdly, there is a risk aversion to doing anything digitally. People fear fraud and getting cheated on their payments. They feel that banks might charge more, but they will eventually get their money safely.
- Fourthly, fx management is still an area that is affected by stern regulations. Businesses fear governmental interventions, license cancellations, and more. through banks, they feel it makes the process clearer and in confirmation with local laws.
- Lastly, businesses in the APAC region tend to be more conservative. The nature of their business forces them to not partake in new experimentations in the payments field. This makes them stay away from transfer specialists that might be beneficial for them.
The Final Word
Even though the digital revolution has affected the payments ecosystem, banks still continue to dominate the discourse. Newer businesses and start-ups who are digitally aware might use transfer specialists. Older businesses that are risk-averse to anything digital look to the security and safety that traditional banks are able to provide. Even if that means overcharging them for every transfer. The need of the hour is spreading awareness and information on the positive benefits of these specialized platforms for businesses in the PAC region.
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