What All Entrepreneurs Should Bear in Mind When Paying International Invoices

Most SMEs have to pay international invoices at some point, and many go through traditional banks and suffer hidden costs.

International payments are the norm for many SMEs and startups and it’s important to know where to go for the best rates and lowest fees.

Today, many SMEs make and receive international payments. Whether it’s paying an invoice, sending or receiving money from an international company, or purchasing goods and services: international payments are common for the majority of businesses.

Unfortunately, it’s often all too easy to remain blissfully unaware of hidden charges and costs when transferring funds. According to one survey, one in five SMEs have no idea how they’re being charged. This article will give you helpful tips on sending and receiving money from international companies, but for now, read on to discover the process of paying international invoices—including sneaky hidden costs to be aware of and potential platforms you can use to transfer money in the most cost-effective way.

Going with traditional banks to pay international invoices comes with hidden costs

Brick-and-mortar banks charge excessive fees and often add hidden markups on international invoice payments by presenting an inflated exchange rate. Rather than showing you the current market rate, they’ll instead show their market rate which includes an additional markup. A recent report even uncovered that while banks were giving the stated fee of sending €1,000 internationally as 2.56%, the actual fee after including their mark-up was 3.77%. This is a significant difference that shows how misleading traditional banks can be. 

It’s understandable that SMEs should be wary of using brick-and-mortar banks to pay international invoices, especially considering they charge UK SMEs around £4 billion in hidden fees annually. Most banks use the SWIFT network for international transactions. However, there are significant drawbacks to using SWIFT to send funds. For example, the fees charged between banks are not relayed back to the customer, meaning you are left in the dark about what you’ve been charged for and how much of your money reached the recipient. 

Luckily, there are much cheaper alternatives available for paying international invoices, and businesses no longer need to rely on traditional banks. Next up, we’ll look at three of the best alternatives you can use for international transfers.

There are lots of better banking options you can utilize when paying and receiving international invoices

Fintechs are innovators in the banking industry, and this is no different when considering international invoices. Paypal, Wise, and Rebank are all offering far cheaper international transfer rates in comparison to traditional banks. 

Here’s three highly competitive alternatives for sending international payments.

Paypal

One of the biggest fintechs to date, Paypal is often the go-to for small (and even larger) companies paying international invoices. This is because Paypal is an established and trusted service in the international payments space. They were one of the first successful online payments vendors and have 392 million active accounts as of 2021. Their system, app, and UX are also very user friendly and seamless.

If you want a trusted and reliable service, then Paypal is your friend. However, while it’s an excellent service, it does come with a price tag that’s competitive when compared with traditional banks, but it’s by no means the more cost-effective option out there.

Wise

Rather than adding costs after the international payment is made, Wise (formerly TransferWise) gives customers their costs upfront. Amazingly, Wise are up to eight times cheaper than banks. For example, a UK business paying a €1,000 invoice to a European supplier would face—on average—a £3.88 fee with Wise, whereas with an alternative payments processor like PayPal they’d pay £41 in fees.

As you can see, Wise is a great choice for international payments and they’ve been steadily expanding their services and available countries since they launched over ten years ago.

Rebank uses the best payment rail available for the customer based on the selected currencies, destination, and cost. More importantly, we are always transparent with fees for sending your money internationally. Using Rebank is cheaper than any other provider, including Wise! For example, if sending £100,000 internationally, Rebank will only charge you £350. In comparison, Wise would charge you a hefty £900. Furthermore, our easy-to-use platform makes sending money internationally easier than ever before. Below shows you just how much money you can save using rebank: 


Savings when paying internationally using rebank over banks and wise

Start using alternative payment services and begin saving money

There’s a great variety of cost-effective options you can choose from when paying and receiving international invoices. You no longer need to go through traditional banks and be at their mercy when it comes to hidden fees and extra charges. Alternative services like the ones mentioned above are user friendly, transparent, and cheaper (plus 100% safe and secure). The sooner you start using them to pay international invoices, the sooner you’ll start saving.

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