by Edoardo Volta, Director at Mastercard
Sending money abroad is simple, isn’t it?
If you ask the 5.4 million Small and Medium Sized Enterprises (SMEs) in the UK, it’s likely they’ll disagree. SMEs pay more than £4bn to send money overseas each year* – and it’s a complex, unpredictable and costly process.
There are a myriad of different banks involved, all sorts of compliance requirements, and intricacies depending on which country the payment needs to be made to.
And since smaller businesses don’t have the same negotiating power as larger companies, the challenges are magnified for them. These challenges prevent SMEs from developing international business relationships and reaching their full potential.
Financial institutions have a responsibility to make this process better.
We’re working on new ways to facilitate and reduce the costs of international payments, creating different solutions for different needs.
Do you accept cards?
Increasingly, SMEs are making and receiving cross-border payments using commercial cards. Some even offer an incentive for suppliers to do so. There are benefits for both parties. The payer can manage their cash flow, as many commercial cards have a 56 day interest-free period with a low fee. The receiver gets paid quickly, and both avoid using a network of correspondent banks. Both parties also have greater visibility over the funds.
Send it digitally
There’s another (near) real-time way businesses can pay each other. Mastercard Send is the first of its kind: a digital hub that allows businesses, retailers, governments, not-for-profits and others to send money to consumers and businesses, either domestically or across borders.
SMEs can make international payments without making a bank transfer, and funds arrive almost instantly. There are in-built compliance features, plus transaction limits and blocks to prevent money laundering. Many businesses find it saves them money when making payments.
Without getting into the finer details, hopefully I’ve shown some faster, easier and cheaper ways to make international payments. It’s a good idea for SMEs to speak to their bank about the solutions available.
Maybe sending money abroad doesn’t need to be so complicated after all.
Edoardo Volta works with banks to provide SMEs with payment products that meet their changing needs.
*According to a study carried out by Money Movers in 2016, it costs UK SMEs £4bn to send money overseas each year.