International Payments: How to Select the Right Financial Services Provider

As we approach 2023, PayAlly looks at the importance of international payments, sharing expert tips to help companies find the best provider.

With globalisation, increased movement of goods and services, capital and people, cross-border payments continue to grow in economic importance. According to the Bank of England (BoE), global payments will increase from $150 trillion in 2017 to over $250 trillion by 2027. This increase equates to over $100 trillion in a decade.

Now, more than ever, businesses must review their payment strategy. Selecting the right partner will support future growth, ensuring companies remain profitable in a competitive landscape.

Navigating Market Volatility

In October, we saw the pound plunge against the US dollar as the mini-budget made headlines worldwide. While the sterling has recovered, we will likely see enhanced volatility in the months ahead.

The US dollar is a “safe haven” currency for many companies as it is the world’s reserve currency and is often the default denomination for business deals. Markets perceive the US Federal Reserve as more credible in fighting inflation than other central banks. Nonetheless, Federal Reserve Chair Jerome Powell acknowledged that “with the benefit of hindsight”, the US underestimated inflation.

Throughout 2022, the pound’s weakness contrasted with the US dollar’s strength. As we enter the new year, many fear that the “mighty” dollar is weakening. Both J.P. Morgan and HSBC question whether it will remain strong in the coming months.

What Does This Mean for Businesses?

Movements in foreign exchange (FX) markets affect businesses of all sizes in the UK and globally. The dollar’s strength is good news for companies that are paid in US dollars as they will see these profits translate into sterling. However, UK businesses paying for goods and services abroad may be impacted negatively by these movements, particularly if they are paying in US dollars. Some organisations may struggle to absorb increasing costs, lowering their profit margins.

How Can Financial Services Providers Help?

A financial services provider can help reduce a company’s currency exposure and decrease bank fees. These companies allow businesses to access competitive exchange rates, so they can save when compared to making transfers through their bank. They can also help speed up payment processing, helping streamline payments via a platform and expert tools.

Some offer Relationship Managers who act as partners, helping a business improve its payment strategy. They will support decision-making, offering bespoke solutions. This is particularly useful for any business importing large amounts of goods or any company considering expanding abroad. In addition to paying suppliers, companies may need to pay vendors and tax authorities in their local currencies.

An established specialist payment provider may also provide a team of in-house experts. Companies can leverage these experts’ skills and backgrounds as they grow and their payment needs become more complex.

What Benefits do Financial Service Providers Offer Businesses?

Unlike some firms that rely on chatbots or automated services, specialist payment providers offer a hyper-personalised service with a dedicated expert. Some firms often make headlines for poor customer service. Recently, we’ve seen users make allegations of unjustified fund freezes from neobanks. Customers sometimes receive their funds weeks, if not months, later.

The biggest advantage of using an established specialist payment provider is the high level of customer service available. Dedicated Customer Relationship Managers deliver an exceptional experience, giving choice and flexibility in managing finances. They offer a deep understanding of markets, leveraging insights to help streamline a company’s international payment strategy.

Partnering with International Payment Providers

An international payment provider can help you better understand your business’s current level of foreign exchange risk and offer solutions to support payment processing. Some providers even offer a “business health assessment” to review your business strategy.

By assessing historical data from your business over a 3, 6 or 12-month period, a Relationship Manager will use this data to help you identify different payment solutions and tools. The provider may also support you in developing a formalised payment strategy to reduce currency risk.

Additionally, some providers may onboard your business partners to help improve payment processing and speed up transactions.

Finding the Right International Payments Provider

While there is no shortage of options available, it’s best to pick a partner with a strong mix of global and local knowledge. For instance, if you’re considering expanding your business’s operations to a specific country, you should choose a partner with a proven track record in this territory. Make sure to check that your international payment provider has the expertise and experience to serve your needs.

Additionally, you should consider speed and safety. An established provider will help your organisation send and receive payments with ease. This limits your payment risk as your operations scale. Some providers will offer valuable market insights, working with treasury teams and other departments to improve decision-making across your business.

Finally, you should assess their level of customer service. Does your provider respond promptly to your requests? A responsive Relationship Manager will be able to react quickly to market events and communicate with your business effectively, supporting you in adjusting forecasts and refining your payment strategy.

Other Factors to Consider

Before selecting an international payment provider, it’s essential to confirm that it is authorised and regulated by the relevant national authority. You should also check what currencies it offers. Most providers benefit from a dedicated web portal or mobile app. Some may offer a debit card for international payments in multiple currencies, which is useful if your organisation regularly uses a debit or credit card.

Conclusion

Cross-border payments are a crucial part of everyday operations. Technology has transformed how people pay for goods and services. While international payments still sit at the heart of any financial system, the method and nature of transactions have evolved considerably in recent years, thanks to the rise of FinTechs and neobanks. Nonetheless, a dedicated Relationship Manager is indispensable in delivering the best possible experience, helping achieve a business’s short-term and long-term goals.

PayAlly gives you the tools to transfer your money globally. Our financial experts will find the ideal payment strategy for your business. Apply for a corporate or individual account today by visiting: https://payally.ca/apply/.

If you’re already a client, contact your Relationship Manager at any time or call +44 (0) 20 7489 6480 for more information.

Sponsored content. Market forecasts may change. Information provided does not constitute advice.