Foreign exchange transactions are common and important for SMEs, but SMEs often face high costs associated with international payments. For example, when transferring money from one country to another, SMEs need to fill out different forms for different currencies. These forms are often written in complex financial jargon and can take up to two weeks. Moreover, SMEs have no direct access to foreign currency markets and can easily be taken advantage of by online companies that offer foreign exchange services.
Although the SMEs can use the same payment solutions as large companies, their costs are disproportionately high. As a result, they have to pay high international transaction fees. In addition, payment forms continue to be too complex for the average SME owner. Additionally, they use a lot of financial jargon and may require different payment forms for different currencies. These factors can make payments very slow and frustrating in an environment where time is of the essence.
Resources to manage
While some SMEs do not have the resources to manage foreign currency risk on their own, a foreign currency provider may be able to expand its margin and ease the risks of fluctuating exchange rates. While many foreign exchange providers offer similar services to SMEs, there are also many differences in the cost structure of these services. While most of these providers charge a high fee for their services, their spreads are typically high and the fees can add up to hundreds of dollars for each transaction.