Death of foreign exchange drives global payroll payment switch
Foreign Exchange is dead. Long live Global Payroll Payments.
Not long ago companies looking to expand overseas were faced with an expensive dilemma. Setting up employees overseas has always been tricky, but international Payroll, HR and Finance teams were stung by the traditional monopoly of the big banks when it came to the banking and Foreign Exchange (FX) model, with the conversion of funds from then host country to an employee’s foreign bank account often costing a great deal of money.
FX became a dirty word.
Now however, a new breed of Global Payment providers is breaking the mould with international payroll with efficient, trusted and cost effective international payments that save companies tens of thousands in conversion costs and transfer fees. The stigma of Foreign Exchange is now being replaced with the trust and assurance of global payments.
Fresh research this year, by payment consultancy Accourt, found that UK banks charge small and medium sized enterprises (SMEs) nearly £4bn in hidden transfer fees each year to make international payments. 96% of these fees are hidden from the customer using the exchange rate offered. Have you questioned the fees being charged by your business banking partner?
How can Global payment providers do it so cheaply?
It’s all about cost structures, spread margins and charges.
Global payment providers often have lower cost structures than banks, offer more competitive exchange rates and charge smaller upfront fees. They rely on slick operation and robust technology that allows them to buy very competitively, and yet still be able to add on their margin to undercut bank transfer rates. And it puts Payroll, HR and finance people in control.
Bank charges for international Payments can be very costly
Banks often have big upfront fees – including transfer fees and receiving fees. Foreign Exchange is determined by an exchange rates. Exchange rates can fluctuate and that’s where Banks make the money. Banks can buy currencies at one price, add on a margin for themselves, and resell them to businesses for a profit.(often known as the currency spread) The scale of that margin makes the enormous difference. Small fluctuations in the resale price to businesses every month for payroll can stack up over the year.
So, if you’re looking to expand your business overseas and placing your employees in other countries, make sure you include a review of your global payments as part of that process.
IRIS FMP International handles Global Payments as part of our global payroll service. Find out more here