Transcript for Episode 26 - Choose the right payment methods

As an exporter, you'll have a choice of several different types of payment method. So let’s look at the advantages and disadvantages of each one.

International bank transfers.

International bank transfers are the most common form of payment for business to business transactions.

Pros include relatively fast and secure bank transactions. And managing and monitoring your account online is usually easy.

However, you’ll have to pay bank fees and it’s not generally suited to consumer transactions.

Credit and debit card payments.

Paying with a credit or debit card or via a service, such as PayPal, are quick and easy transactions. And they’re widely known and trusted by customers.

The cons are that they all charge fees, and there are likely to be limits on the size of payments you can receive. So they're generally used for lower value customer transactions.


Local bank accounts

Local bank accounts are generally used by well established exporters with a physical presence in their market.

The pros include giving you the option of paying in the local currency. And they can help to minimise the effect of exchange rate fluctuations.

The cons include that some countries cap the amount of local currency that can be transferred out of the country.

There’s a possibility of other restrictions and regulatory hurdles for overseas companies.

Manage your risk.

To manage your risk, negotiate terms which will reduce risk of non-payment.

And for larger payments, where added security is required, financial products provided by banks, such as letters of credit can help reduce risk.

Finally, research your specific export market because different countries have different regulations and laws around payments.