The rules that govern cross-border transactions have been designed with a number of businesses in mind. With the different charges levied by various countries, how can businesses reduce the amount they pay to their clients?
Border fees are a way for governments to help prevent money laundering and financial fraud. While there is nothing illegal about paying for an item with a card or a wire transfer, this can be a loophole that can be exploited by criminals.
Every year millions of dollars are lost through major frauds such as card or wire fraud, forgery, and identity theft. With the recent interest in natural health products, these losses are becoming more commonplace.
Because the laws that regulate this area are laid down, businesses must abide by them. Not only do businesses pay for the cost of having government officials investigate a transaction, but there is also a hefty charge for filing a report to the government.
While this charge is small compared to what the company has to pay to its clients, it makes sense that businesses would want to learn how to reduce the cost. The best way to reduce these costs is to avoid settling international transaction fees altogether.
Since not all businesses attempt to avoid them, a great deal of businesses often have to worry about the charges being implemented when the company enters into a contract. Fortunately, the costs can be reduced by using a payment processor that lets companies avoid entering contracts with banks or other businesses that need to be involved with international transactions.
A payment processor is a system that processes payments without setting off a charge on the client’s card. While most businesses know that card processing is included in every payment that they receive, many don’t realize that international transfers are part of the process as well.
In fact, businesses who use a processor will have the option of choosing how much they want to pay in fees. This can be either fixed or variable, depending on how much the company can afford to pay to reduce the costs.
Using a processor with a fixed cost can mean that the company pays a one-time charge for signing up. On the other hand, a variable charge is the same regardless of how much the business can afford to pay in fees.
Because the cost of using a processor is controlled, it allows businesses to choose how much they want to pay each month, which will help them avoid setting off the same charge each month for any transactions. By using a program that charges less each month, businesses can also minimize the amount of money that gets sent abroad.
Unlike when the company makes international payments over a single account that charges different fees, a processor can control the rates. Most processors have similar payment options so that businesses won’t need to worry about a specific rate.
By considering how the fee structure can affect a business, it is easier to understand how a business can reduce the costs associated with cross-border transactions. Choosing a processor that is dedicated to helping businesses avoid transaction fees can save the company money in the long run.