Looking to transfer money globally but unsure where to start? Samuel Pitt, OFX’s account manager, enterprise and partnerships, offers tips for some common foreign exchange scenarios.
Despite throwing foreign exchange (FX) rates into a state of flux over the past 18 months, the COVID-19 pandemic has also been a breeding ground for opportunity.
Many traditional bricks-and-mortar retailers have pivoted online and ventured into global markets, gaining a new customer base in the process while also creating security in the event existing revenue streams slacken due to pandemic-related restrictions.
Amid such upheaval, FX support can not only help mitigate revenue loss from poor exchange rates and fees, but it can also identify the right solutions for specific circumstances, says Samuel Pitt, account manager, enterprise and partnerships at global money transfer specialist OFX.
“Whether they’re individuals, traditional businesses or emerging e-commerce businesses, everyone has a different need,” he explains. “There’s no cookie-cutter approach.”
FX options for overseas trade
Growing numbers of retailers receiving payments from international e-commerce marketplaces need to contend with a whole new world of payment gateways, country-specific rules and regulations, fees and payment structures. Considering the different FX options available is key to capitalising on new ventures.
One such solution is a global currency account that enables online sellers to collect funds across different currencies depending on where their customers are based, make payments like a local through access to multi-currency funds, and repatriate all international revenue back to their home country when ready, so they are not at the mercy of currency markets.
“It’s about working with the different payment gateways and getting the most bang for your buck, avoiding situations where you’re doing double conversions or paying fees unnecessarily,” Pitt explains.
Meanwhile, Australian importers and exporters hoping to protect their business from the fluctuating market might consider currency hedging strategies and tools such as forward contracts. These allow businesses to transfer funds up to 12 months in the future at an agreed rate, so they can forecast and budget accordingly.
Target rate transfers are another option that enable businesses to take a “set and forget” approach.
“Clients can set a target rate and if that rate is reached, the transfer will be processed. This can be beneficial if you have time on your side, or flexibility with when you need to move your money, as it allows you to keep your eyes on your business, not on exchange rates.”
Transferring money abroad
It is not just businesses that stand to benefit from FX support.
Individuals planning to sell US shares or employee shares in a foreign currency and repatriate the funds back to Australia, for example, often look to experts to guide them through the process.
Dealing with e-trade accounts and dividend payment dates can be “a walk in the woods”, says Pitt, particularly if this is the first time selling overseas shares.
If you are looking to sell US shares, you need a local US account to enable the share dealing platform to pay into.
FX specialists can help bridge the gap for these share sale transactions by administering the overseas payment and converting it into the desired local currency.
“Offshore equity management is tricky, and the correct process is often hard to identify,” Pitt says. “FX experts can help people navigate the transfer process of moving funds from A to B in an uncomplicated fashion.”
Find out more about foreign exchange options.