Stop Banks from Cashing in on Your Company’s International Payments

Part Four: How do know an international payment specialist is safe?

Many British companies make payments to or from the UK and in the process they unintentionally lose money. In some cases, losses can be tens of thousands of pounds. This is part 4 of a special 4-part series that has been written to outline how the bank-to-bank international payment process works, the specific areas where companies are losing money, definite actions that can be taken to contain or to avoid losses altogether and how to make sure the process is safe. At the end of this article you will find details on how you can download the full series of articles.

In the previous three parts, I explained that companies can save money by using an international payment provider rather than using a high street bank. Compared to the mark-up applied by the banks on a money transfer, clients can save up to £4,000 on a £100k transfer by using a currency specialist. And on regular monthly payments of £1,000 a saving of up to £40 per month is more than possible - that’s £480 a year. The other way to save is by enlisting the help of a specialist to reduce and/or eliminate fees - it’s sometimes possible to save £50 to £100 on every transfer.

I also explained that rather than being forced to take the exchange rate on the day that the money needs to be transferred, there is the option to buy a ‘Forward Contract.’ This allows organisations to reserve a fixed exchange rate over a period of say, 1 year. Although many exchange rates are unfavourable right now, it is thus possible to ensure that it doesn’t get any worse over the course of the next few months or year.

Plus there is the option of the ‘Limit Order’. This is for organisations that don’t necessarily need money urgently, but are happy to buy or reserve it for use at a later date if the rate is beneficial and as discussed with their currency company. This means that if you have regular payments abroad that you know about in advance and if the money market hits that pre-determined rate, your payment specialist will aim to buy the currency for you so that the value of your currency remains the same, thus making budgeting easier.

But what about the safety of using an international payment specialist over a bank? How can you ensure they are legitimate? How can you make certain that your funds are protected? When doing business with any company, especially one that will be handling your cash, it’s very important to do your due diligence and check them out. These are the main details you’ll want to research:

Companies House – make sure that the organisation that you’ll be sending funds through is a registered company at Companies House. Most organisations will display their company number on their website or on the letterhead and you can enter the unique number online to review their status.

Regulated by HM Customs & Excise – all international payment organisations must be regulated by HM Customs & Excise. To check that a particular organisation is registered, you can visit the Customs & Excise site and enter the company’s MLR number. The site will verify the company is on their books.

Financial Services Authority (FSA) – as of 2009 all institutions that move money international need to be authorised by the Financial Services Authority under the Payment Services Regulations 2009 (FRN 504509) for the provision of payment services. This FSA statement needs to be clearly highlighted on all company materials – including the website. So if you don’t see the FSA statement, make enquiries.

Location of the Bank – since the fall of Northern Rock and issues with the Icelandic Bank, many Brits have worried about guarantees from their banks. How much money will they guarantee to pay out if the bank goes bust? British banks only guarantee £50,000 per individual, whereas Irish banks have various schemes that can guarantee the full amount_. When selecting an international payment provider, if you’re moving funds over £50,000, it might be worth finding one that moves funds through the Irish banking system.

This concludes the special 4 part series. The key point to take way is that international payment specialist can help your organisation to reduce the expense associated to making/receiving payments overseas.

For more information on Smart Currency Business call: 0845 638 0571 (or +44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyBusiness.com