Whether you’re running a business, taking control of your household finances, or looking to purchase a gift for a loved one, international payments are always on the horizon. In a world in which so much of what we do seems to be built on supplier chains that stretch across multiple borders, the age of purely domestic commerce and business appears to be largely over.
In this article, we’re going to take a closer look at how it has happened, what it means, and the impact it has on daily life in practical terms.
How has globalisation happened?
Economies of scale and the constant search for greater levels of efficiency and cost-effectiveness have driven the world to become increasingly globalised. Sourcing raw materials, hiring talent, and providing services are just a few examples of things that can extend around the world. Supply chains have gotten longer, and many of us are now paying for things internationally. When you think about it in these terms, you start to see that paying for things in foreign currencies extends far beyond booking vacations and accommodation.
What does globalisation mean for payments?
In short, payments need to be able to cross borders rather than exist solely on a domestic basis. This means that currencies need to be converted, exchange rates and other fees need to be factored into the operation, and a network of intermediary banks needs to be used to move the money from one point to the next. All of this means that there are now a variety of ways that consumers and businesses choose to pay for things internationally.
Are domestic card payments viable?
While this is the obvious approach to take for domestic purchases, things quickly get complicated when making international payments. The difficulty lies in the fact that there is no one card that can offer uniform processing times, fees, and rates across every international location. Inconsistency, delays, and unpredictable charges can make trying to map a domestic approach to payments onto the rest of the world feel like the headache that will never end.
Is it wise to shift to USD cash?
Many tourist hotspots in certain areas of the world will run parallel USD cash economies alongside their local currencies. If you are there in person and feel comfortable spending cash, then this may be an option, but turning to cash as a cure-all solution is never a wise move.
Cash cannot be tracked or traced, is not electronically backed in case of theft, and quickly becomes highly impractical when you are looking to make larger payments. Offers of local services to handle cash for you should also be avoided at all times, as they will generally be fronts for scams and fraudulent activity.
The rise of transfer services
Globalisation has led to the advent of a variety of new services, chief among them of which are money transfer services. Every bank account has a unique identification number (IBAN), and every bank has a unique code (SWIFT) that is used for communication purposes. Money transfer services are the experts in using these key pieces of information, as well as the network of intermediary banks that process payments, to make sure money is moved quickly and efficiently.
Keeping yourself safe
A simple step like knowing how to check SWIFT code details can make a real difference when you need to keep yourself safe online. Scammers and fraudsters will often masquerade as a legitimate business or as someone you know, but use a different SWIFT code to try and get you to send money to a different part of the world. Being able to perform a quick check will help you detect a key warning sign, and having the following in mind will help too:
- Treat any unsolicited approaches for payment, even if the person claims to be involved in a transaction you’re currently working through, as immediate red flags
- Avoid anyone who looks to try and apply pressure to you when you are considering purchasing goods or services from overseas
- Only make traceable electronic payments — never cash — so that you can make sure that the money goes exactly where it needs to
Combining a pragmatic and cautious approach with a willingness to only use regulated money transfer services is important. Doing so doesn’t just keep you safe, it ensures you pay the lowest fees, get the most competitive exchange rates, and that your transactions complete without delay. Exactly what you want to hear when you’re looking to make the globalised world work for you.
