Everyone loves supporting small businesses. In fact, if you are ever considering running for office in the United States, nothing will give you more advantage than being a small business owner - across demographic, political, and ethnic lines.
We are willing to bet that the love for small businesses is universal. Everyone loves small businesses, except maybe big businesses?
Historically, big businesses have always enjoyed economies of scale and small businesses had close to zero chance of competing with them. Thanks to the internet, the modern digital world, and sheer human nature to solve every problem. Basically, if there is a known problem, there are people working towards a solution.
Small businesses of today can compete with the big businesses almost on every front. But if you have ever tried to send money internationally to your friends and family or to small businesses abroad, you know how cumbersome and outdated the systems are.
Traditional roadblock exists especially in the money transfer or cross-border industry. The good news is that there are many Fintech startups that are committed to solving this problem and banks and incumbent players are pumping in top dollars to innovate.
Let's take a look at some of the most popular ways to send money to small businesses abroad.
When choosing a payment method to send money to small businesses abroad, there are several factors that go well beyond "When will my money transfer reach the recipient?"
The answer is not as simple as it seems. For instance, the quickest way to send money is not the cheapest or very rarely the cheapest.
Here are some of the most important factors you should also consider in addition to the speed of international money transfer: exchange rate, transfer fees, and speed.
Whether you are a big company paying a freelancer abroad or a small business paying another small business abroad, and anything in between - always put security as the top priority. Your financial service provider should have a robust security system in place.
One of the easiest ways to do it is to simply compare the top money transfer companies on CompareRemit.com. CompareRemit is the leading online comparison portal for money transfer companies, and any company listed has been vetted by the team. We have done the homework for you so that you don't have to.
PayPal is currently one of the most popular online payment platforms in the world. PayPal is synonymous with the word "payment" in the world of freelancers and small businesses. In fact, you will often hear it being used interchangeably. "PayPal me?"
PayPal is one of the most preferred payment methods for businesses because it offers affordable fees compared to the high-street banks. However, there is still a fee attached to it.
Depending on how you are making the payment: Credit, Debit, or PayPal balance, your fee can go higher. In addition to the transfer fee, they also charge a fixed fee on the foreign currency conversion.
There is a reason why PayPal reigns supreme - deals with over 30 million merchants in 200 different countries. The reality is that regardless of the payment method, you will end up paying a certain amount in fees. While it is not possible to completely avoid the fees, here are a few tips you can use.
Xoom: Best for PayPal account holders
Switch to Xoom. Xoom is also a PayPal service, but it specializes in international money transfers. You will get a high exchange rate, zero to low fees, and quick transfer to small businesses abroad. The best part? You can also use your PayPal balance to fund your transfer.
Wise: Best for transparent transfer fees
Wise, formerly called Transferwise, offers the cost of sending money using their services upfront. In addition to being transparent with their transfer fees, they offer close to mid-market exchange rates. And several products and services that are best suited for freelancers, digital nomads, and small businesses abroad.
Western Union: Best for Cash transfers
Western Union is an incumbent in the international money transfer industry. If your recipient is in a developing country, chances are there will be a Western Union agent. So if you are looking to send cash internationally, Western Union can send money to over 200 different countries from the United States.
XE: Best for exchange rates
The exchange rate on XE.com is used by multiple services for reference, similar to what you see on Google.
Naturally, Xe offers excellent exchange rates for international money transfers and offers low transfer fees. Xe is especially for CAD to INR and USD to INR corridors.
Small World: Best for home delivery of remittances
Small World offers home delivery of remittances for select countries. If your recipient is in one of the countries on their service list, it is an excellent choice. You can get the money delivered directly to the home address of your recipient. The world is a small place indeed.
OFX: Best for eCommerce businesses
OFX offers e-commerce seller accounts that offer you competitive foreign currency conversions and transfers fee. OFX also offers greater control of your e-commerce business with tools like Limit Orders and Forward Contracts.
To sum it up - when it comes to finding the best ways of sending money to a small business abroad, three main factors determine what is best: speed of transfer, exchange rate, and transfer fees. High street banks charge you and sometimes the recipient exorbitant fees, and other traditional ways of sending money such as checks are simply outdated.
In addition, depending on the nature of your business or personal requirements, your needs will change. For instance, If you will be sending money to a supplier abroad regularly, you may want to check whether you can integrate it with your accounting software.
Different money transfer companies have different propositions. When in doubt, compare, and save on every transfer.