We received a great response from our readers on our white paper study done on “Cross-Border B2B payments in India.” Taking the analysis further, we did another study on the cost of B2B payments for a Southeast Asian country – the Philippines. The country provides enormous opportunities for B2B players, both domestic and foreign. Compared to other developed markets, the Philippines is largely under-penetrated with a huge potential for growth in the cross-border B2B transaction market. B2B payments, which make up the bulk of all payments, are still overwhelmingly in cash and checks. The total value of B2B payments in the Philippines was around USD 31.9 Bn. The owners of mostly formal small retail establishments identified as potential agents revealed that businesses made 66% of their payments to suppliers in cash.
To evaluate the various options and players available in the Philippines for B2B cross-border transactions, LTP has come up with a white paper which is focused on solutions for Philippines businesses or professional service providers that need to get paid by their international clients (the US, EU and the UK) or freelance marketplaces expecting payments for their services from abroad. For comparison, we conducted real transactions to compare the actual fees and currency conversion rates offered by the players. The players involved in our comparison are Payoneer, PayPal and banks, and our analysis reveals that payment fee can be reduced by as much as 58% by switching to Payoneer.
The two scenarios evaluated by us were:
Scenario I: Working with an international client directly, i.e., where a Philippines company bills a US-based company directly.
Given below is the conclusion of our analysis:
Out of the three given options, Payoneer offers the best currency conversion fee of 2% above the mid-market rate available and is the best option for making cross-border transactions. In this comparison, by using Payoneer, you would receive PHP 2,553 more than if you used a bank transfer and PHP 1,328 more than using PayPal. Payoneer offers a great service called the “Global Payment Service” (used by LTP for making a direct international transfer) which provides users with local US, EU, UK and JP receiving account numbers. Funds paid into these accounts are received into the user’s Payoneer account and then can be transferred to the user’s local bank account in PHP which keeps the cost of transferring money low and efficiency high. Alternatively, the funds can be spent or withdrawn using the Payoneer Prepaid MasterCard.
Scenario II: Working on a freelance marketplace such as Upwork which presents the freelancer or service provider with several options of how to withdraw (transfer) the funds out from their Upwork account.
For Payoneer customers using their account rather than card, the $2 fee is waived, making it the lowest cost option even for small amounts. When it comes to withdrawing amounts over $400, Payoneer is always the best option due to the low conversion fee of 2%. Payoneer offers a dynamic discount on the conversion fee based on the profile and volume of transactions processed by the customer.
Introduction to Payoneer and its point of differentiation:
Payoneer empowers global commerce by connecting businesses, professionals, countries and currencies with its innovative cross-border payments platform. In today's borderless digital world, Payoneer enables millions of businesses and professionals from more than 200 countries to reach new audiences by facilitating seamless, cross-border payments. Additionally, thousands of leading corporations including Airbnb, Amazon, Getty Images, Google, and Upwork rely on Payoneer's mass payout services.
Unique Point Of Differentiation:
- Free collection service: It is free to receive payments in EUR and GBP when using Payoneer’s Global Payment Service. It costs just 1% to receive USD payments.
- Billing Service: The Payoneer Billing Service is a fast, simple & low-cost way for Filipino freelancers and businesses to send a payment request to international clients and get paid safely and securely by bank transfer, e-check or card.
- Low currency conversion fee: Payoneer transfers payments locally in PHP at the low rate of 2%. Additionally reduced tiered pricing is offered to high volume earners, getting as low as 1%.
- Real-time money transfer facilities: One of the main advantages of Payoneer is that it allows you to withdraw your money faster. Even on verified accounts, PayPal still takes three to five days to process withdrawals. On the other hand, funds are usually made available within 24 hours when using Payoneer and be accessed instantly using the Payoneer card or withdrawn to a local bank account in PHP.
With Payoneer's fast, flexible, secure and low-cost solutions, businesses and professionals in both developed and emerging markets can now pay and get paid globally as easily as they do locally. For more information, click here.
To read the full whitepaper, please click here.
Note: The research has been sponsored by Payoneer, but the views expressed in this paper are those of Let’s Talk Payments, reflecting our independent analysis.