Hidden costs – life is full of them, and they are annoying for everyone. But for online sellers in the e-commerce world, hidden or small fees can cut into your margins and significantly impact your business over time. As you’re hard at work with marketing, logistics, and other aspects of running your online business, these can impact your trajectory in a number of ways.
Unfortunately, one area littered with hidden costs comes when you begin operating internationally as a business. And this is where Fintuitive aims to help, simply put we help businesses operate more efficiently by helping them reduce costs and improve efficiencies around their global banking, international payments, and currency conversions.
Breaking down the costs
So, what are these costs? High international payment charges, bad exchange rates, account fees, fluctuating exchange rates, and more can all have a serious impact. Unfortunately, sellers on Amazon often find it hard to avoid these sorts of hidden costs, given the way selling on Amazon works.
Obviously trading internationally on Amazon has huge advantages – where else can you access massive international markets relatively easily? – But it also comes with drawbacks, namely that you must play by their rules. Unfortunately, one of those rules is how you receive sales revenue from Amazon’s international marketplaces. Amazon stipulates that you must have a bank account in the country of the marketplace you are selling in, and if you don’t, you are left using Amazon’s in-house currency exchange and international payment services to send your international revenue back to your domestic bank account. This may not sound so bad but when you start looking at the costs of these two choices, using Amazon or opening overseas bank accounts, you start to uncover a wealth of hidden costs and generally inefficient options to Amazon sellers.
If you forgo opening bank accounts in the overseas markets where you are selling, and instead use Amazon’s in-house international payment services, you will suffer a very poor exchange rate. This means you get much less in your home currency than if you had converted your international revenue by other means. Amazon’s rates are many per-cent worse than what you could expect elsewhere, but many sellers endure it because the other option is pretty unappealing as well. Having to open bank accounts in all the international markets you sell in, can be a headache.
Consider the position of a British business selling on Amazon in the US, Canada, and Australia – not an unusual situation for a seller looking to expand into English-speaking overseas markets. They would need to find banks in these three overseas countries willing to open an account for a foreign business. They would have to do three different account applications and manage three different accounts with three different banks. And let us be clear, this is the best-case scenario. They might find the overseas banks will not even open them an account if they do not live in that country. Time consuming, costly, and potentially impossible. But what if there was an alternative?
A fintech-powered solution
Fintech powered solutions such as Fintuitive’s global banking platform help to break down the restrictive practices of traditional banks. We enable clients to open individual, Amazon compatible, E-Money accounts in 12 jurisdictions worldwide, helping clients selling in North America, the UK, Europe, or Asia open and operate receiving accounts for international Amazon revenue. This all operates through one simple-to-use online system and a single, straightforward, account opening process.
With a Fintuitive account, clients can:
- Receive overseas revenue from Amazon.
- Hold balances in foreign currencies.
- Convert currencies at market leading exchange rates.
- Make international payments in a cost-effective manner.
- Manage their FX market risk.
This solution helps our clients reduce the cost of converting overseas income and making international payments. They also benefit from being able to utilise overseas revenue for overseas costs, eliminating double conversion costs and reducing currency risk.
For example, a UK client receiving USD from sales in the US (but perhaps with USD costs such as stock purchases from China) can use their dollar revenue to pay for dollar costs and therefore avoid costly double conversions via GBP and without exposure to GBP/USD exchange rates.
More broadly, Fintuitive can also help businesses assess and manage their FX risk. With even comparatively stable currency pairs like EUR/USD, GBP/USD and GBP/EUR moving in excess of 10% over the course of a normal year, the impact of future moves in the currency markets on a business should be assessed and mitigated against, as adverse moves in an exchange rate can erode international profit margins and price competitiveness of a sellers products. In the fiercely competitive Amazon marketplace, these eroded margins can be particularly problematic. Fintuitive can help avoid this happening to your business.
Get help from Fintuitive
Of all the challenges of selling globally, managing your international revenue and payments is not the most difficult, but it can end up creating expensive mistakes if not managed properly. With Fintuitive’s scalable solutions, whether you are just starting out or have been selling internationally a while, we can ensure you have the right structures in place to ensure that the hidden costs that can creep into moving money internationally are not holding your business back. For more information contact Peter and the Fintuitive team via their website.