How to Choose a Secure Payment Solution in Today's Global Marketplace

By Nagarajan Rao

Our interconnected age has fueled the sharing economy, connecting businesses to new age entrepreneurs for buying and selling goods and services globally.

Let’s say you’re an entrepreneur in California with a gourmet coffee-roasting business that buys beans from growers in rural villages of Colombia. You recently hired developers in Bangladesh to revamp your website, and now you're launching a social media campaign that’s being implemented by media specialists in Romania. Overnight, you need to pay individuals in rural Colombia, Bangladesh, and Romania.

These scenarios, commonplace today, present a dilemma. While opportunities to tap into suppliers and talent worldwide are growing by leaps and bounds, ways to pay have lagged behind. Issuing secure and timely cross-border payments in an extremely complex global payments environment can be very stressful.

Here’s a look at the different types of international payment products available:

• eWallets: A virtual account where funds reside, eWallets can be used for sending secure payments without exchanging private account information. While virtual funds are available instantly, retrieving funds from an eWallet can take anywhere from hours to days and come with high costs.
• SWIFT wire transfers: Payment messages are delivered from bank-to-bank through a transcontinental network of correspondent banks. Transfers can take anywhere from hours to days and sometimes weeks, with fees accrued at each clearing point.
• International prepaid cards: With sponsorships from Visa or MasterCard, these prepaid debit cards are funded by businesses and delivered in USD or Euros. Used anywhere where Visa/MasterCard are accepted, local usage of these cards carry higher costs to receivers with monthly recurring fees, transaction fees, and FX conversions; international prepaid cards are the costliest way to receive money.
• International ACH:  A more recent phenomena where banks and third-party providers offer a direct deposit service. Funds are deposited to the receiver’s local bank account in local currency through local clearing systems. This method works well for sending mass payments, but it's particularly expensive when used in emerging markets.

Emerging markets in Asia, Latin America and Africa are at the center of the sharing economy boom. While online marketplaces and trusted platforms have enabled almost anyone to become an entrepreneur, effective solutions for sending global payments have lagged behind.

Fortunately, payment innovations are enabling faster, more efficient payments to service providers worldwide. New solutions focused on enhancing international ACH transfers are quickly replacing eWallets, wire transfers, and international prepaid cards.

When looking at payment solutions, what should you be considering to ensure timely, secure financial transactions across borders without paying excessive fees? To decide which payment option works for you, consider the following:

1. Know what support you require from a payment provider

A good payments company should not burden your staff with many additional tasks. You should be seeking a turnkey solution that offers simple and straightforward support for your staff.

2. Identify what payment options are most convenient for receivers.

Offering flexible options will save you headaches later and build stronger relationships with your recipients. Being able to offer both direct deposits to recipients’ bank accounts or a local cash pick-up agent is a competitive advantage when working with companies or individuals in emerging markets where bank deposits are not widely used or accessible.

3. Understand your total costs.

Insist on a full rundown of costs. What are the transaction fees? How are exchange rates determined? Will the recipient also have to pay fees? Compare a full range of payments solutions, and make sure to consider the latest mass payments platforms, which are designed to reduce costs by up to 60 percent.

4. Consider how long it will take for your payment to arrive.

A good payments gateway will have the ability to process near-instant payouts globally. Transfer times should be in minutes, and in some cases hours, but it should not take days.

5. Ask the provider about their compliance programs.

The payments company you choose should have a robust compliance program, and should be licensed in the appropriate jurisdictions, both in the U.S. and internationally. Leaving this potential headache to a trustworthy payments company means you can focus on mission-critical aspects of your own business.