June 22, 2016
Cross-border payments have become a critical part of millions of lives as we moved towards a more globalized world and multicultural societies. The segment represents a massive market, great opportunities and very promising players. As large, cross-border payments become more common, B2B merchants are looking for the most convenient, cost-efficient and transparent options. This is driving more of these transactions to the Web and mobile channels vs. traditional agent-based and bank-based options.
To evaluate the various options and players available in India for B2B cross-border transactions, LTP has come up with a white paper which is focused on solutions for Indian businesses or professional service providers that need to get paid by their international clients (the US, EU and 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 fees can be reduced by as much as 71% by switching to Payoneer.
India provides enormous opportunities for B2B players, both domestic and foreign. Compared to other developed markets, India is largely under-penetrated with a huge potential for growth in the cross-border B2B transaction market. But often, B2B merchants face problems while receiving payments from across the border.
According to a report by Atradius, the major problems faced by Indian B2B merchants while receiving foreign payments are:
In the white paper, the two scenarios evaluated by us were:
Scenario I: Working with an international client directly, i.e., where an Indian 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. Also, the transfers made through Payoneer allow customers to save on forex conversion & transaction fees. The option of direct wire transfer between banks is a very expensive and has the probability of the transfer being delayed or getting lost. PayPal is another option for directly transferring money but has a very heavy landing fee of 4.4%.
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 freelance marketplaces in India, Local fund transfer is one of the most preferred options by freelancers as it does not charge any landing fee. Payoneer is also a great way to receive payment from various companies that are popular among Indian freelancers & bloggers. The biggest benefit is that freelancers save a notable amount in the withdrawal done through Payoneer.
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.
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 funded by Payoneer, but the views expressed in this paper are those of Let’s Talk Payments, reflecting our independent analysis.