In the increasingly interconnected world that we are living in today, most businesses are now finding themselves exposed to a wider range of clients from all over the world; thanks to the advent and growth of e-commerce. Be it large corporations, small and medium enterprise or startups at their early stages, all businesses today have the advantage of running online shops that can be accessed by anyone from anywhere in the world as long as they have internet connectivity. These results to fair competition between the big companies and the startups as well as provide larger target markets for them to sell their products and accelerate their growth.
However, even as the positive outcomes of e-commerce are continuing to revolutionize the global economy, there are challenges that the online business model faces. The top challenge is payment methods for transactions made online; especially in instances where your buyers are living in a different country or continent and using a different local currency. On the other hand you could be getting your raw materials and other production inputs from overseas; and you will need to make large money transfers abroad on a regular basis in order to pay your suppliers in different currencies. The two scenarios present situations whereby you will be dealing with foreign exchange management more often in your typical business transactions; hence exposing you to the volatile world of foreign exchange market.
Before starting your online startup or before adopting e-commerce for your existing business, you will therefore need to do thorough planning on how you will handle your international money transfer in the most efficient manner. If you delve into international trade without proper planning, you might fall into the traps of rogue foreign exchange brokers; who will charge you a high premiums way above the prevailing market rates for currency conversion. Repeated over time, and with several transactions per month, you will end up losing much of your profits to the forex brokers; who will be minting forex fees from every transaction you conduct when transferring or receiving money from abroad.
To cut down on your forex fees and ensure that you receive a fair deal when transferring your money abroad, you will need to first begin with a thorough due diligence into the existing money transfer companies and know the rates they offer. This will involve scrutinizing the exchange rates they offer as compared to the prevailing average market rates. In addition, you will need to assess if they are having any other hidden costs or charges that they include in their fees calculation when facilitating your currency conversion transaction. You can get this data from several reliable online sites including form independent review sites that rate the money transfer companies. After getting the data, you then choose the best money transfer company that suits your startup based on the countries where most of your customers come from; and the currencies that will be involved in most of your international transactions.
Based on whether you are running your own online shop or whether you are listing on other large e-commerce platforms, you will need different levels of online security too. This is meant to ensure that your online financial transactions are protected from online fraudsters and hackers who might steal your credit card or bank account data and use it to divert money from your account to their off-shore bank accounts. If you list your products on an existing large e-commerce company with inbuilt payment methods; in most cases they will be bearing the burden of securing all the transactions happening through their site. You will therefore not have much influence on the security issue and you will not need to invest so much money in it. However, if you are running your own online shop with inbuilt payment channels; you will need to also invest heavily on online security, in order to protect your client data from being exposed to online fraudsters and hackers.
Even with the best online security installed and the best money transfer company locked in, still your risk exposure is not fully sorted. One more thing that you need to do is to ensure that you take advantage of the different periods within the month when the exchange rate is in your favor before making or withdrawing your international payments. You will need to plan to pay for your imports when your local currency is stronger than the currency of the country you are buying from. On the other hand, when exporting your products, you want to do it when your local currency is weaker; so that you can attract more orders due to the relative affordability of your products resulting from a stronger currency in the country where your customers are.
In summary, getting into e-commerce is a great idea for reaching more customers in order to accelerate the growth for your startup. However, you will need to have a clear plan on how you are going to handle currency exchange for international transactions; and how you will secure all your online transactions to protect them from internet fraudsters. The latter will enhance your credibility and reliability among your customers; and hence enabling you to build your business based on customer trust.