Learn how to expertly execute global payments for streamlined accounts payable and business efficiency.
It is essential to look for a global payments processor that supports a vast range of localized payment methods. Also important is to choose one that supports payments in different currencies. With an SaaS-based payment solution, you can streamline the entire cross-border payment process, plus improve tax compliance, and payees will thank you for a simple registration process.
When hopping aboard the mass global payments processing wagon, there are several key factors to keep in mind.
What Is Global Payment Processing?
The global payment process begins when a payment is made to a supplier, vendor, publisher, or other affiliates whose bank account is outside of the country in which your business operates. Traditionally, global payments processing requires inputting data into multiple bank portals and are accompanied with expensive fees and costly overhead. When processing global payments to a supplier in a foreign currency, you may also endure heavy conversion fees if you don’t partner with a cost-friendly global payments processor.
Fraudulent payment attempts are a common occurrence among global payments. Tipalti, a leader in processing global payments, has mitigated the loss of more than $4 million thanks to its enhanced fraud detection practices. Tipalti Detect performs extensive preventative fraud monitoring and has stopped more than 7,000 fraudulent payment attempts.
Tips for Processing Global Payments
Once you have partnered with a supplier or vendor, you must discuss how payments will be made. Choosing a payment method is impacted by several factors, including:
- Your cash flow needs (How quickly can you make the payment?);
- Economic conditions of your country and the country from which you are importing;
- Type of product being sourced;
- Banking system intricacies;
- Currency conversion rates;
- Creditworthiness;
- Your need for the product.
Before making a global payment, inquire about the fees. You may find it’s best to send a payment that takes longer to process if you have budgetary limits. Also, you must confirm the supplier is legitimate before you send the payment. A global payment operator can help verify suppliers for you.
The State of Cross-Border Payments
Globalization has transformed every aspect of global payments. Research indicates the majority of organizations’ international payment practices are not effective or efficient — yet confining operations to only local suppliers and vendors is not an option due to ever-increasing competition. As a result, back-end payment operations must be refined to assure global payments can be made quickly, efficiently, and without costly overhead expenses.
The size of a company tends to impact how many global payments it makes. Generally, the larger the company, the larger the volume of international payments. A company’s industry of operation also impacts the number of international payments. Those in the following fields typically make larger volumes of cross-border payments than most other industries:
- Banking;
- Computers;
- Manufacturing;
- Communications;
- Business services.
Why Do so Many Global Payments Fail?
Global payments consume a large amount of time and energy from the accounts payable (AP) department. Domestic and international payments are processed very differently. When AP departments are not available to handle them separately, this can lead to an increased risk of non-compliance and human error. After all, ensuring payment accuracy and upholding tax and regulatory compliance are essential to global payments.
A large number of global payments fail because the payee’s account and routing numbers are not entered correctly into the payment system. When a payment is processed incorrectly, it can take many days, and possibly even weeks, for the mistake to be corrected. This can hinder relationships with vendors and suppliers. Thus, the goal should be to make the global payment process as simple as possible. Providing suppliers with a simple way to upload their account and routing numbers and choose a preferred currency and payment method will improve relationships and may lead to discount pricing opportunities.
There are several global payment processors that connect with a single acquiring bank. If this acquiring bank is within the United States, then any payments originating outside of the country are deemed as cross-border payments, and this increases the likelihood of them being declined.
Other global payment processors connect with two to three acquiring partners, which reduces the chances of the cross-border payments being rejected. Yet other global payment processors have anywhere from 10 to 20-plus partners they team up with to process international payments.
Global payment processors like Tipalti take extra measures to ensure every cross-border payment is processed quickly. Even when a transaction is declined, it can be sent to a different acquiring bank for processing. This speeds up the entire payment process and gives a payment as many chances as possible to be approved without having to resort to a different payment method.
What to Look for in a Global Mass Payments Platform
First off, when choosing a global mass payments platform, look for enterprise-grade financial controls. Also, check for the ability to schedule thousands of payments at the same time and whether the platform supports multiple payment methods. Different suppliers are going to have varying payment preferences. Paying them according to their most-preferred method makes it easier to do business with them, as well as streamlines the entire payment process.
Some suppliers may prefer Global Automated Clearing House (ACH) payments, while others request PayPal or wire transfer. Their preferred method will impact the information you need to collect — but with automated global payment processing, you don’t have to concern yourself with collecting this information because the automation software will do it for you.
Also important to consider is a processor’s ability to conduct thousands of payments at the same time. More so, compliance with cross-border remittance rules is of the utmost importance. Tipalti has 26,000-plus built-in banking rules that work simultaneously to ensure each transaction is compliant with applicable laws and regulations. These rules also eliminate payment errors, which expedites the payment process by making sure each supplier is paid on time, every time.
Businesses that make mass global payments will greatly benefit from using an automated mass global payables platform. An end-to-end global payment engine that automates the numerous and intricate tasks involved in global payments will result in faster payments, lower processing costs, and better cash flow management.
