The coronavirus crisis of 2020 triggered the worst economic recession since World War 2, according to UN News. The situation isn’t going to improve soon as millions of people who lost their livelihoods have already gathered. That’s why expert management of your finances has become even more important during this difficult time. Online money transfer companies offer services that can help you with that. They will be invaluable not only for business owners and investors but also for individuals. Everyone who makes any kind of international currency transfers or exchange should know how these platforms can save their money.
Who Can Benefit from Using Money Transfer Companies’ Services
We live in a globalized world. Thus, everyone needs to make an occasional international money transfer. However, making a rare purchase in an online store doesn’t usually offer grounds to worry about the money transfer method. In the majority of cases, retail buyers have to use PayPal or Amazon international payment services for this. Do note that international payments through these services will cost 3.5-5% of the transfer amount. Therefore, if you are an online merchant, you definitely should offer your customers a cheaper payment option. This is where online money transfer companies become highly valuable for eCommerce.
International investors also are greatly affected by changes in foreign currency exchange rates, and it’s the same for any global business. Note that it doesn’t matter whether you are accepting payments from international customers or making payments to foreign suppliers, freelancers, or for outsourced services. In any of these situations, businesses as well as investors are exposed to currency risk. This means that should the foreign currency exchange rate change sharply, you might end up losing a lot of money. Every entrepreneur and investor should understand how unexpected losses can affect your whole business future.
However, the foreign exchange (FX, forex) markets are inherently volatile. FX rates change multiple times during the day. That’s why forex traders need to be extremely alert and fast in order to keep up with the trends.
The volatility in these markets is getting much worse during a crisis. Therefore, it’s not a surprise that the COVID-19 pandemic and the global economic recession it triggered made currency markets extremely unstable. According to the experts from NASDAQ, this volatility will continue for a while until the global economy starts recovering. Thus, the already existing currency exposure risk has grown in severity for SMEs and private investors.
How to Choose a Money Transfer Company You Can Trust
Online money transfer companies are also often called online FX brokers or currency exchange companies. That’s because they offer a rather versatile range of services. They can be used for sending remittances, accepting and sending international payments, exchanging currency, making overseas investments, etc. Their most important purpose is to help you convert the currency at a much better rate.
Using these companies can help you reduce the cost of an international money transfer to under 1%. Businesses and investors that need to make large regular transfers can even get an opportunity to exchange currency at the mid-market rate. This means that you’ll get the best rate you possibly can.
These money transfer companies are mostly online-based platforms. This is one of the reasons they are able to offer transfers at a lower cost compared to banks. However, a trustworthy company still must have an office.
The leaders of the industry will have a few in the countries where the bulk of their customers reside. The number of local offices worldwide is one of the factors to consider when choosing an FX company. Another useful factor is its standing with the Best Money Transfer Service Award, which recognizes the leaders of the industry every year. This award goes to businesses that have been researched and compared extensively by unbiased professionals. Therefore, you can use it as an indicator of reliability, transparency, and competence.
The online money transfer industry is not well-regulated at the moment. That’s why professional awards as well as certification by trusted authorities, like the FCA, serve as most reliable proof that the company can be trusted. Be sure to check for them as the industry is relatively new and has a fair share of frauds.
Also, remember that while low FX rates and transfer fees are important, they shouldn’t be the main deciding factor for you.
Beyond Money Transfers: Additional Services Offered by FX Brokers
The true strength of online FX companies lies in the many useful services they can offer along with cheaper transfers. The most important of these services for businesses and investors include:
- Multi-currency accounts.
Online merchants can greatly benefit from multi-currency accounts when working with buyers worldwide. They are much more flexible and cheaper compared to the same service offered by traditional banks. This account will also allow you to hold a balance in several currencies. You can use this to make very cheap local payments worldwide without exchanging the currency at all.
- Investors, businesses, and even expats who make regular payments (for example, mortgage) in foreign currencies must seek to reduce their currency exposure risk. Hedging tools, like forward contracts or currency options, can do this. They will either help you fix the FX rate or reduce losses should it change. However, banks only offer hedging to their biggest clients. Money transfer companies, on the other hand, offer this option to everyone who uses the specific service package.
- Currency management and guidance.
Most importantly, online FX brokers offer you assistance in making important currency-related decisions. This guidance is necessary for everyone who isn’t an experienced FX trader. It will allow you to make the most out of the services offered by FX companies.
Bottom Line: Make International Currency Exchange & Transfers Cheap
International money transfer companies are getting more popular today and with good reason. Any savvy entrepreneur, investor, or even a seasoned global traveller can benefit from using them. You shouldn’t miss your chance to reduce the costs of cross-border money transfers and therefore improve your own bank balance. Research the options thoroughly because businesses in this industry are flexible and versatile. Therefore, anyone can find a company that will meet the requirements of your specific situation.