The Challenge of Sending Money to China
When you are sending money to China via traditional bank wire, it is an expensive, slow and complicated process.
Correspondent banks are involved, heaps of paperwork, stamps, and signatures are required for a remittance transaction to go through. Even then, the whole process can easily take a week, and banks clearly do not provide these services out of the kindness of their heart. Every single step incurs a fee, which is mostly hidden within foreign exchange rates.
The reason why wiring money through banks can be so complicated is because it is all using technology which was first developed in the 1970s.
Recipients claiming to not to have received the funds wired to them is not uncommon at all. With zero transparency in which no one knows where a payment is at any given time, it become harder to work out whether the payment is simply in transit or if there is a genuine problem that needs addressing. As time drags on, the only ways are to keep on waiting or to get on the phone to your bank to initiate wire trace.
Resolving issues can take days, sometimes even weeks.
Businesses tend to see bank charges as a cost for carrying out their operations. However, by not taking the time to look for alternative options or reducing these charges, they will be making a clear loss.
It is difficult to estimate the cost of remitting payments into China, however Goldman Sachs
estimated that banks are earning an average of 6% from their customers’ international payments. Payment fees can also be anything between 3% and 10% across the entire transaction. Once you factor all of this in, that few percent start to make a big difference to businesses.
Doing Business Better
When more businesses are increasingly working on tight margins and budgets where a few percentages make all the difference, being smart about your payment methods can be a great way to make your business significantly more competitive.