Peter Olynick once said, “Within five years, half of today’s smartphone users will be using their phones and mobile wallets as their preferred method for payments.” That was in 2012.
A dozen years later, Olynick’s nearly correct. There are trillions of transactions yearly via mobile payment channels.
But which of these apps or software is most befitting for your business or personal needs? In this article, we’ll provide a guide for picking the right international payment systems.
International Payment Systems Definition
International payment systems describe a global network responsible for processing cross-currency financial transactions. Banks, brokerages, clearing houses, and all the key players in fiat circulation contribute to domestic and international payment systems.
Swift, otherwise known as the Society for Worldwide Interbank Financial Telecommunication, is one of the pillars of international payment systems. Most finance institutions processing cross-border payments use Swift.
Types of Cross-Border Transactions
There are different reasons to engage in cross-border transactions. The most common ones include:
E-commerce Payments
E-commerce transactions are growing at an incredible rate, with an expected revenue of billions of dollars in 2024. Now that the world is a global village, the issue of dual currency arises when buying from an international vendor.
Remittances
Here, you send money to someone in a different country. Despite the significant differences in currencies, digital payment systems make the process fast and instantaneous in some cases.
International Trades
Import and export business owners need a cross-border payment system to pay suppliers or receive money for products sold. In most cases, these businesses will handle massive amounts while dealing with different currencies.
Travel Payments
Digital payment systems allow you to convert local fiat into international currency at the click of a button. Through this innovation, traveling has become easier and more cost-effective.
Business Payouts
International companies sometimes need to pay employees and process refunds across their borders.
Cross-border payment systems that are a great fit for transactions like this also exist.
How to Choose the Right Payment System for Cross-Border Transactions
The world of cross-border transactions is broad and can be complicated at times. This guide will help you choose the right cross-border transaction system.
Consider Currency Options and Conversion
Your payment system should support multiple currencies and allow you to accept international payments. This way, you can bypass all unnecessary exchange rates and fees.
It also helps to pay attention to the conversion rates you come across. There’ll most likely be more competitive options worth considering.
Look into Software or App Fees and Costs
Every software or app that runs an international payment service will have domestic fees. They may charge you per transaction, take a percentage of your transaction amount, or do both.
Since there are usually several options, compare available fee structures before selecting one. More importantly, watch out for hidden fees like currency conversion, withdrawal, or foreign transaction charges.
Payment Processing Speed
Online transactions have different processing speeds. Some are instantaneous, while others require two to three business days for settlement. If you own a business, focus on software or apps with quick processing times to avoid blocking cash flow.
In general, look into what other users say about the payment systems you’re considering. That way, you can identify the ones with same-day, next-day, or multiple-day settlements.
Security and Legality
Whether you’ll be moving small or large amounts of money, you want a trustworthy payment system. Cross-border transactions are vulnerable to fraud and cyber threats. So, you want a financial broker with security measures, encryption, and fraud detection protocols in place.
Before using any cross-border payment system, investigate its legality and compliance history. While it’s easy to overlook this factor, that’s the last thing you’d want to do in this internet age. Ensure your options comply with anti-money laundering (AML) and know-your-customer (KYC) regulations.
User Experience
This requirement is essential for business owners. When choosing a cross-border payment system, consider the user interface from your customers’ perspectives. An overly complicated checkout point can cause abandoned transactions and lost sales.
Similarly, you should pick a payment system that effortlessly integrates with your e-commerce business.
International Reach or Coverage
Digital payment platforms have different types of reach. Some cater to a near-limitless audience, while others are restricted in their coverage. When it’s for personal consumption, check the list of available funding methods on your site.
Most international businesses like global retail stores will typically opt for popular methods like PayPal, Payoneer and Stripe which are available across 150+ countries. That way, they can reach all their customers from around the world.
On the flip side, some other companies only operate within a small geographical spread and would usually use payment options available in that locality. A perfect example is the online casino industry in Canada. For a long time, Neteller was an accepted payment method in the country, leading to an increase in the number of casinos that accept Neteller for deposits and withdrawals.
However, today, these platforms are still very popular for the quality of their gambling services and payment processing. The top casinos that use Neteller are known for transaction security, low fees, and instant payments.
Customer Service
Before signing up with any digital payment method, ensure the customer support team is active and on standby. Cross-border transactions can get complicated, and you may need emergency attention.
Go for an app or software with 24/7 availability and hands-on assistance. There should be multiple support channels for customers.
Reputation and Reliability
Finally, research the track records of your options before signing up. Your best options are established, well-respected brokers. Remember to read the reviews other transactors have left behind.
According to Jim Marous, “Financial institutions must be able to deliver an easy-to-navigate, seamless digital platform that goes far beyond a miniaturized online banking offering.” If this is true, international payments must build a reputation by ensuring that they integrate all other important features of a good payment system like security and user-friendly interface.
Conclusion
International payment systems are unavoidable in this digital age. Now that transactions are not limited by paper money, there’s a pressing need to choose a reliable exchange platform. Ensure you choose only the best, as that’s the only way to guarantee your safety and satisfaction as a customer.
