Doing business internationally can take many forms. It can be a simple case of a freelancer providing work for a range of clients in different countries. Or it can be an organisation that has suppliers or customers spread throughout the world.
Virtual banking is set up to support these kinds of ‘payments without borders’ transactions. It offers low transaction fees, rapid fund transfers, the ability to deal with multiple currencies and support for international payment standards such as IBAN and SWIFT.
International business can often be relatively simple, with payments sent and received directly between companies and individuals. But sometimes it requires a more complex approach.
For example, take businesses that work for third-party organisations through partners, with each company located in different countries. The company performing the work will be paid by its partner, which in turn will be paid by the customer, meaning payments for a single service will cross two international borders. Traditional banking will make this process expensive and complicated.
Supply chain is another area in which multiple borders could be involved. Businesses requiring raw materials may import them into one country via one company, with a second company then distributing to the customer in a third country. Again, payments will need to be made to the distributor, which will then make a payment to the supplier of the raw material.
The impact of Brexit may also increase the likelihood of goods crossing multiple borders. If the UK is outside of the European Single Market, there are likely to be increased tariffs on goods and services coming into the UK.
To get around this, an organisation may purchase items from companies within the Single Market, arrange for them to be exported to a third country which has a free trade agreement with both the EU and the UK, then import them from there. While this will save on tariff payments, it will mean payments will need to be made to businesses across two borders.
In all of these cases, the ability of e-payments to minimise the costs of international transactions will generate significant savings for all the companies involved. The rapid speed of transactions supported by virtual banking will also be a benefit, meaning payments can get to the recipient with minimum delay.
Organisations working with partners and third-party customers or suppliers in different countries may sometimes need employees to visit these various companies. Virtual banking will also help in this context, by providing prepaid payment cards that can be used to purchase goods and services at no additional cost wherever the user is in the world. These cards also have flat ATM rates, giving the ability to withdraw cash in any local currency.
Virtual banking enables businesses that conduct financial transactions across multiple countries to do so more cost-effectively than traditional banking. There is no need to set up expensive wires, and payments can be made with little fuss or delay.
By using virtual banking across several borders, companies can multiply the benefits of doing business across a single border, making even more sense for them to make the switch away from traditional banking.