With the aid of technology, transferring money has become quicker and very convenient. For small businesses that receive money from clients and customers around the globe, there are a variety of options to consider. One of these options is an international wire transfer.
A wire transfer is a payment method or money transfer done electronically. An international wire transfer, as the name suggests, is sending or moving of funds from one country to another. A financial institution such as a bank can process international wire transfers but there are also agents like Western Union or MoneyGram that also allow you to send and receive funds from different locations around the world. If you’re looking for an efficient and quick way to receive funds for your small business, you should consider the benefits of an international wire transfer which is also known as an international money transfer.
International Wire Transfers: How It Works
Wire transfers are processed through banks and other financial institutions. The sender is asked to provide the bank account details of the recipient which is accomplished using a form provided by the bank or agent.
In general, the following information will be required from the sender:
- SWIFT code (or SWIFT number): this number is a unique code or ID assigned to financial institutions worldwide.
- Bank name.
- The account name of the recipient.
- The account number of the recipient.
Other information may be requested such as:
- The address of the receiving bank
- The address of the company or person receiving the money
It’s now possible to process an international wire transfer online, some companies still require senders to fill up and sign the required paper in person. The fees associated with international wire transfers will differ based on the fee structure of each bank. For example, customers transferring money from Australia to the USA will have to inquire about the fees from their bank.
Importance of International Wire Transfers for Small Businesses
In order to grow your small business, you must come up with ways to get a bigger share of the market, including the global marketplace. Although there’s nothing wrong with keeping the presence of your business in the local market, increasing your presence in different countries can work wonders for your bottom line. You will also be able to share your products, services, and concepts to overseas customers.
Small businesses that can accept international wire transfers are more profitable than those who can’t. Having the capability to accept international wire transfers gives the following benefits to your business:
- Increase your presence in various markets
- Scale your business and support its growth
- Improve your company’s reputation
- Boost your revenue and bottom line
- Help your business succeed over the long term
Wire transfers, whether local or international, are very secure money transfer methods because both sender and receiver accounts will be verified by the bank or financial institution. This payment method is also versatile, allowing the sender to transfer the money directly to a bank account or via pickup at an authorized money transfer agent.
How Your Small Business can Accept International Wire Transfers
Accepting international wire transfers does wonders for your business because you’ll be able to receive payment from overseas customers or offshore partners who are not comfortable using their credit cards to purchase something online or order an item from overseas. Credit cards are financial tools that offer plenty of conveniences but some people still prefer to use wire transfers as it is less risky.
Payments are very important for small businesses, thus the ability to receive an international wire transfer will benefit the company. In order to accommodate international customers, your company must have the capability to accept international wire transfers for payments. To receive payment via international wire transfers, you must provide your customer with the following information:
- Your name and address
- Your bank account number
- The address of the bank branch
- The international routing number of the bank
- Indicate the currency accepted for deposit
Major financial institutions and banks around the world offer international wire transfers, but there are also money transfer organizations that provide online facilities for sending and receiving money. Money transfer organizations such as Western Union, PayPal, MoneyGram, Payoneer, Transferwise, XE.com, and Skrill are some of the most popular money transfer companies in the world.
Bank-to-bank wire transfers vs. Online Money Transfers
Online transfers and wire transfers have some similarities since these two payment methods utilize electronic systems to move money from one location to another. They are also both fairly safe and secure methods of transferring money.
Wire transfers are typically faster than online payments. Payments coursed through PayPal, for example, may take up to 3 days to be received. Wire transfers coursed through banks (via branch or online banking) and companies that process wire transfers will only take several minutes and not longer than an entire day.
Both domestic and international wire transfers move the money from one bank to another bank or a bank to a wire transfer service provider. Online money transfer companies, on the other hand, virtually moves funds from one account to another. For example, if a PayPal-using customer wants to buy an item from your online store, you should also have an active PayPal account to receive the payment.
With wire transfers, all you need to have is your bank account information. There’s no need to create an account from a third-party online payment processor to receive your funds which may also take a few days to be cleared.
Costs Associated with International Wire Transfers
To receive an international wire transfer, your customer must have your bank information. If the customer is sending it through wire transfer service providers like Western Union, you’ll receive a reference number which you need to present to claim the money.
Wire transfers cost more than online transfers because of the amount of work involved to wire the money from one location to another. There are fees to pay whether you are the sender or the receiver.
Wire transfers may cost from $15 up to $65. Domestic wires are less costly because the funds only have to pass through one system to be processed. International wire transfers, on the other hand, involve several organizations: a local bank, a foreign bank, and wire transfer systems in the two countries. Wire transfers from country to country are also more expensive due to the banks’ markup – the interbank rate, which is a percentage of the amount sent.
International Wire Transfers for Small Businesses FAQs
Should small businesses accept international wire transfers?
Small businesses benefit immensely from receiving payments via international wire transfers. Although credit cards are widely used to pay for domestic and cross-border purchases, some customers are not comfortable sending their credit card information over the Internet. You may also encounter a customer who doesn’t own a credit card, so an international wire transfer is usually the best alternative. Online money transfer services are convenient to use but some clients may not be able to use the platform due to limitations and restrictions. Funds may also take some time to arrive at your bank account. International wire transfers are one of the oldest but most reliable ways to send and receive money across the globe.
What are the disadvantages of receiving money through international wire transfers?
Sending and receiving money through wire transfers is safe and reliable. If there were any disadvantages in receiving funds through cross-border wire transfers, it will be the fees involved in the transaction. Fees are usually not lower than $15 for domestic transactions and around $50 for international transfers. One way to mitigate the expenses in receiving payments through wire transfers is to ask the customer to send the payment in your currency. You may also ask your bank if they have special rates for recurring wires.
Another disadvantage that you may face as a business owner is when offshore clients prefer other payment methods over international wire transfers. Some clients find the rates of international wire transfers too costly. It’s therefore recommended to have a variety of payment options to offer your international customers.
What is the minimum and maximum amount that you can receive through international wire transfers?
The banks involved in the wire transfer usually dictate the minimum and maximum amount that can be transferred and received. The great thing about wire transfers is that it allows larger amounts of money to be transferred compared to online money transfer platforms.
In order for businesses to make money, they must be able to receive payments from local customers and international clients. International wire transfers make it possible for small businesses to pursue clients from anywhere in the world. If you want to make the presence of your business felt in different markets around the world, you must be able to accept wire transfers internationally. Even with the proliferation of online money transfer services, wire transfers are still considered the most reliable and secure way to send and receive funds.