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Doing Business in Multiple Currencies: Payment Options for Cross-Border Businesses

So you’re thinking of expanding your business overseas.

Along with all the research you’re doing on markets and localisation, another big hurdle is deciding the right payment option for your business. In other words, how are you going to make and receive payments in other parts of the world?

Here, we’ve evaluated some of the ways global businesses send and receive money internationally, to hopefully help shed some light on what might work best for you! 

1. Make an international transfer through your local bank

The most basic way to send money internationally is of course your good old bank transfer by using a SWIFT / telegraphic transfer (TT). You can typically get this sorted through your bank’s online banking portal or in person at a branch. 

Considerations for this payment option:

When you send money internationally, banks transfer the funds through a network called SWIFT, which is made up of banks (known as “correspondent banks”) around the world that help facilitate the transfer. Since there are so many middlemen involved, these transfers often rack up many hidden fees.

So, your own bank might tell you there’s a $20 fee for an international transfer. What you don’t expect, however, are the fees from all the banks in between, as well as extra losses through currency conversion at a not-so-attractive exchange rate. In the end, this has all added up to $50 which has been taken out of the amount you originally sent, and your supplier is demanding the remaining amount. 

2. Send money overseas through a remittance company

Remittance companies, like Western Union or Moneygram, are another option you can use to send payments internationally. 

These companies typically don’t use the SWIFT network, so a lot of the time you don’t have to deal with as many hidden fees. There are many new startup remittance companies that charge lower fees and don’t mark up the currency conversion too. Most of these remittance companies have their own bank accounts and funds available in various jurisdictions, so that customers avoid extra fees, as transfers are processed as a local transfer. 

Considerations for this payment option:

While remittance companies can be cheaper than a bank, the main reason why a lot of business owners choose to use their bank account is simply because of convenience. You may not feel like going through the hassle of another account process just to make one payment. 

What’s more, it’s easier to keep track of your payments and cash flow if all of them are made and received from one account.

3. Open bank accounts in different jurisdictions to receive and send funds locally 

Opening a full bank account in another country will allow you to send and receive funds locally, without international transfer fees. 

Take the following scenario: you own a Hong Kong company and you mainly sell your goods to other businesses in the United Kingdom. To avoid paying hefty fees each time your customers transfer funds to you, you decide to incorporate your business in the UK, and open a local GBP account in the UK. In this way, you can accept payments in GBP and also pay your British sales staff locally as well, without converting funds back and forth all the time (and potentially losing money in the process).

Considerations for this payment option:

If you do business with people all over the world – for example, if you run an e-commerce company and have suppliers and customers globally – it may not make sense for you to take the time to incorporate in multiple countries (which is often a requirement to open a local bank account) and open bank accounts there. It takes time and effort to open a bank account (and in particular, with Hong Kong banks). 

Also, having multiple accounts with different banks means you can’t see all your accounts in one dashboard. Instead, you’d have to log in to multiple online banking platforms (which aren’t always the most user-friendly), and switch back and forth between browser tabs to see the full picture.

4. Open a multi-currency account from your jurisdiction

If you’re serious about taking your company global, for a lot of businesses, opening a multi-currency account could be your best bet. 

For example, let's say you need to find the best way to pay Chinese suppliers. Firstly, the vast majority of Chinese suppliers that do Western business have bank accounts in Hong Kong – a lot of the time in USD as well. So, chances are that to accept payment, your Chinese suppliers will invoice you in USD from a Hong Kong bank. The most economical option to pay them would be from another USD account, at a Hong Kong bank, so you do not pay international transfer fees, or lose out on currency conversion.

So if you open a multi-currency account in Hong Kong, you're set for this scenario. One account (i.e. one application process!) unlocks multiple currencies without you having to travel to a bunch of places to do so, so you can hold, send, and receive funds in the currency your customers and suppliers use. 

Considerations for this payment option:

A multi-currency account opened in your local jurisdiction is not the only option for a multi-currency account. 

Let’s say your business is based in Hong Kong and you need a GBP account. So you go to your bank in Hong Kong and open a multi-currency account with HKD and GBP, where both the accounts are based in Hong Kong. 

Now, while you’re going to be able to accept GBP into your account without having to convert it to HKD, if the funds are coming from the United Kingdom or elsewhere outside of Hong Kong, international transfer fees still apply. 

Here’s the smart alternative:

5. Open a multi-currency, multi-jurisdiction account  

The other type of multi-currency account is one that opens local accounts in different jurisdictions in different currencies. Following the same GBP example from above, this is when your multi-currency account actually has local GBP payment instructions, based in the U.K. This makes it a lot easier for you to conduct business with people that are also based there. 

Most importantly, if you accept payments through bank transfers, you can offer your customers local payment instructions that they’re used to which are much cheaper, and you don’t have to wait international transfer times to receive the money. 

Considerations for this payment option:

While all your funds and accounts are all visible and manageable via one dashboard (and you only have to apply once to get access to multiple local accounts) the accounts are in different jurisdictions. This is something to think about if you anticipate the need to regularly transfer amounts from one currency to another. You’ll still have to convert and remit funds from one of your accounts to another. So make sure you get a solution that enables that from that very same dashboard. 

Open a multi-currency account with local payment instructions

If you work in HKD, GBP, EUR, or USD you’re in luck, because you can get a Neat Business multi-currency account with local payment instructions for these currencies. 

With Neat Business, you can open an HKD & USD account in Hong Kong and a GBP and EUR account in the United Kingdom. 

Sign-up for your own multi-currency account today! 

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