Written by in Business on June 22, 2021
If your business is looking to venture into the global marketplace, it’s important to understand not only how your customers will pay you, but also how you will transact with other businesses. There are a number of international payment methods available, but the benefits and challenges associated with the various methods are different in B2B circumstances than they are in B2C or P2P.
The different global B2B payments range all the way from paper cheques to global payments platforms and the procedures surrounding each are vastly different. Here are some of the most common global B2B payment methods and some considerations surrounding each.
Cheques are actually one of the most common B2B payment methods to this day. Despite the push towards the digitization of billing and payments, many businesses continue to rely on cheques as they don’t require a foreign bank account. There is also a sense of reliability and ease that comes with paper cheques, as they’ve been a common payment method for decades.
Unfortunately, this form of payment comes with a number of drawbacks. To begin with, it requires the physical transfer of the cheque by mail, meaning that it takes time to get from one party to the other. In addition, it is difficult to track while it's between hands, as there is no digital log of the transaction while it’s in the transfer process.
There is also the possibility of human error and there is no amendment potential once the cheque has been signed or sent. In the case of an error, the transaction must be started again from the very beginning.
Credit Card Payments
Credit cards are an increasingly popular B2B payment method. It is quick, convenient, and easily trackable. Though, credit card transactions do come with percentage fees, which can be quite expensive in the case of larger transactions. There is also a scenario where accounts have limits, making large-volume transactions impossible.
Finally, when it comes to global payments, there are some credit cards that are not as widely used as others, meaning that it may not be an accepted payment method in the country that you’re trying to do business in.
Wire transfers are secure, quick and reliable international payment methods. Put simply, a wire transfer is sending money from one financial institution to another either via cash or digital money transfer. Wire transfers can be time consuming, as they do take time to process and for the funds to be released on the other end.
In addition, wire transfers do come with fees and, at large volumes, they can actually be quite expensive. In many cases, they can also require people to actually go to the bank, which can be more challenging for some people depending on their location or schedule.
Another increasingly popular payment avenue is payment gateways such as PayPal or Venmo, for example. While these are extremely efficient when it comes to P2P or B2C transactions, they do pose difficulties in the B2B space, especially on an international level.
Some of the drawbacks include long holds which delay the payment on the receiving end, unavailability in different currencies or countries, and large service charges. These gateways serve an imperative purpose, though they aren’t always an efficient and cost-effective option for large-amount B2B transactions.
Global Payments Platforms
Finally, a key player in the global B2B payments game are global payments platforms. These platforms are made for the purpose of sending money abroad quickly and securely without any hidden costs.
Platforms like these often operate at a fixed rate and account for things such as foreign exchange rates and local laws and regulations in both the sending and receiving countries. While they remove the need for localized bank accounts and additional administrative tasks, they also help you protect yourself from loss in the face of currency fluctuations. To learn more about the benefits, click here.
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