How Smart Businesses Receive the Best International Exchange Rates by Jason Kumpf
Hello, I am Jason Kumpf and I work with a vast array of international clients everyday utilizing our $110 Billion international platform at OFX International Wires. What follows are some typical situations I see and how these savvy business people improve their international activities simply and securely with better foreign exchange rates. For more information feel free to email me at [email protected]
The international business community has never been more robust than it is right now in 2019. Global entrepreneurs are becoming more creative and flexible as they adapt to a more interconnected, smaller world. With that in mind, they are also looking for ways to simplify their businesses and their personal lives. Here are some case studies of global businesses and personalities that are finding that better international exchange rates are a necessity in today’s climate.
Small-to-Medium Business
A business in the $1- to $100-million revenue group has to pay international suppliers, vendors and offshore developers. The management group wants to open an office in the US from the UK, or vice versa, and needs an easier way to transfer funds across the Atlantic.
Amazon International Sellers
Large-scale entrepreneurs who sell products internationally through Amazon’s sites, such as amazon.ca or amazon.fr (Canada and France, respectively), receive their proceeds through Amazon’s sites. The proceeds from sales arrive in Canadian dollars or francs, but then those funds need to be repatriated. Amazon charges approximately 3.5%, which takes a large bite out of the seller’s profit margin.
Fortune 1,000 Global Compensation and Mobility VP’s & Directors
Today’s international knowledge worker employees have high expectations when it comes to benefits and perks. Fortune 1,000 companies are having to become more creative than ever before in attracting and retaining the best talent. These companies want to provide the best for their global employees and also their local employees who might be expats. Concierge services and housing rentals are just the tip of the iceberg when it comes to perks for international employees. Global Compensation and Mobility VP’s and Directors also need to be able to offer great exchange rates for these employees.
HWNIs
A medium to High New Worth Individual (HNWI) wants to enjoy life to the fullest. She has earned that early retirement, and now she wants to purchase art from the galleries in France to complement her cars from Germany, that second home in Italy and the boat from Sweden. Nothing is too good for her and now she wants to simplify and her transactions, save time and save more money in the process.
Expatriate Home buyers
A retiree or entrepreneur from overseas, who is currently doing business in the US, wants to buy a home “back home.” Examples would be the Indian technology guru in the Silicon Valley who wants to purchase a home back in Mumbai, or the America broker in Great Britain who wants to purchase a home back in New Jersey. These individuals will end up spending thousands of dollars over the cost of their mortgage if they rely on standard banking fees for wire transactions to make the payments.
Expatriate Retirees
Successful entrepreneurs will often retire to an offshore “paradise,” while their retirement holdings remain in the US or the UK. When those retirement funds are dispersed, wire transfer fees can eat into their fortune much faster than expected.
Accounting Groups
Medium to large accounting groups with clients conducting international transactions can also fall into the trap of relying on standard banking fees. Lower rates for transfers and better currency exchange rates are a must for these firms to stay competitive in today’s global marketplace.
These are just a few examples and you can probably think of many more. The key commonality for all of these individuals and business entities is that they need to wire funds overseas.
The Downsides to Bank Transfers
Traditional banks have not adjusted to the speed of a wireless world; relying on banks for international money transfers is in fact one of the slowest methods of moving money from point A to point B. The bank on the receiving end of a transaction is actually “selling” you currency, rather than receiving your funds. The bank then adds a margin to the sale, much like the hidden margin that you pay for a loaf of bread or a stereo system. You might not realize that the margin is there, but you’re paying it! This functions as a hidden commission within every international bank-to-bank wire transfer. Transfer rates between banks are also constantly in flux. You might see an attractive rate in the morning, but you’ll be charged a different rate if you wait until the afternoon to transfer your funds.
In any of the examples above, a bank could charge $40 to $80 USD for an international wire transfer, charge a hidden margin and give the entrepreneur an unfavorable currency exchange rate. They can do better!
Getting the Best International Exchange Rates
Today’s global entrepreneurs and HNWIs want to improve their international transactions in an easy and secure way. The method to do that is by using one of the newer “fin-tech” money transfer services for wiring funds overseas. OFX (formerly USForex and UKForex), for example, is considered one of the largest and most secure options for conducting an international wire transfer. OFX does not charge a transfer fee and it offers a lower margins on the exchange rate, usually less than 1%, and with volume, less that 0.5%.
Compared to the 3.5% that Amazon charges, or the even larger percentages that many banks charge, it’s easy to see how entrepreneurs and companies can save a tremendous amount of money in wire transfers. They are instantly saving 1 to 4 percent on every overseas transfer. For example, a wire transfer of $100,000 USD would save the sender up to $2,000 on just one transaction. That’s not bad for the 10 minutes it costs to set up a free account with OFX. Savvy professionals are switching to money transfer services like this to stretch their hard-earned money even further.
Jason Kumpf
Director of Strategic Partnerships at OFX International Wires
[email protected] for more information.