Paying International Vendors | Best Methods and Tips

If you have a US business and work with vendors overseas, you’ll need to figure out the most efficient and cost effective ways to pay for goods and services. Whether you’re buying from an international supplier, sending money to a contractor or working with a freelancer who needs to be paid in a foreign currency, the question is the same: how best to send money overseas, quickly, safely and cheaply?

This guide walks through some common options, focusing on the features, benefits and drawbacks. We’ll also introduce Wise Business as a great option for businesses which operate internationally, offering global accounts you can use to send and receive foreign currency payments with mid-market exchange rates and low, transparent fees.

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The Best Ways to Pay International Vendors

There’s no single best way to pay international vendors. Different payment options could suit different scenarios. You’ll be able to choose from some more traditional transfer methods - such as mailing a check or using a bank wire. Or look at some newer ideas, like having a multi-currency account with a non-bank provider like Wise, which lets you send and receive payments in foreign currencies seamlessly and with low fees.

Read on as we explore some of the best ways to pay international vendors, so you can pick the right one for you.

Wise Business: Your International Account

We’ll start our roundup with an option which could help you pay your international vendors - and get paid yourself by customers based overseas: Wise Business.

Wise is a non-bank digital provider which offers powerful business account services which you can use to hold and exchange multiple global currencies, and send cross-border payments. You’ll be able to use your Wise account to send money to your vendors’ bank accounts around the world, with the mid-market exchange rate with low fees. Payments are fast - and can even be instant¹ - so there’s no waiting around for the vendor. Plus, you can send batch payments to up to 1,000 vendors at a time, in multiple currencies - saving you time, too.

Features

• Hold and exchange multiple global currencies with the mid-market exchange rate and low fees
• Send cross-border payments quickly or instantly
• Accounts offer debit and expense cards, multi user access and extras like batch payment services

Wire Transfers

Bank wires are a very common option for paying vendors overseas. Most US banks let customers send wires to more or less any country in the world, to be deposited in the recipient’s bank account. Generally, payments are processed through the SWIFT network, and can take around 3 to 5 business days to arrive. SWIFT is a safe and reliable method of processing transfers internationally, but it can mean fairly high fees overall.

Bank costs for wires can include several individual fees including:

• a transfer charge
• costs rolled into the exchange rate being used to convert your dollars to the currency needed for deposit
• third party costs

It’s fairly common to find that banks waive the transfer fee if you’re sending to a foreign currency - this is Bank of America’s usual approach for business customers for example³. However, where transfer fees apply they can be pretty high - US Bank charges 75 USD per payment⁴.

The costs you need to watch out for, though, aren’t always so easy to spot. Banks might add extra fees onto the exchange rate being used - known as a markup, margin or spread. Plus there could be third party costs which may be called correspondent or intermediary fees. All these extras can add up - and may even mean your vendor gets less than you expected in the end.

Pros and Cons of a Wire Transfer

Pros of wire transfers	Cons of wire transfers
✅Most banks offer wire transfers, more or less anywhere in the world ✅Safe, familiar and secure ✅You can often set up your payment online or with your phone	❌Fees can be high and difficult to spot ❌Exchange rates can include a markup ❌Delivery can take several days ❌High value payments may require a visit to a branch

Costs and speed

	Costs and speed - Wire transfer
Transfer fee	Very varied - some banks waive the fee, r you may pay up to 75 USD Third party fees may also apply
Exchange rate	Exchange rates are likely to include a markup - a percentage fee
Speed	0 - 5 days depending on the destination

International ACH

Nacha⁵ - which operates the ACH system in the US - also offers international ACH payments for individuals and businesses. When you send a domestic ACH it’s pretty cheap and easy to set up, although it may not be the quickest option. International ACH payments are intended to offer the same benefits, allowing you to send money from your US bank to vendors overseas easily, and often online. The major downside here is that not all US banks offer international ACH services. Instead, you’ll often find your bank suggests you use an international wire to send money to an international vendor.

If your business bank offers international ACH payments, compare the costs and availability to see if this is a feasible option for sending money to vendors overseas. US Bank, as one example, offers international ACH payments which it recommends for low value, low urgency business payments⁶ The stated average cost is under 5 USD, and money can be sent to 180+ countries.

Pros and Cons of International ACH

Pros of international ACH	Cons of international ACH
✅Safe and operated by Nacha, like domestic ACH payments ✅Intended to be cheap and easy to use ✅Payments deposited directly to bank accounts	❌Not always available from US banks ❌Not necessarily the fastest option ❌Not recommended for high value payments

Costs and speed

	Costs and speed - International ACH
Transfer fee	Around 5 USD
Exchange rate	Banks may include a markup in the exchange rate used
Speed	Can take several days - not usually recommended for urgent payments

Direct Debit and Bank Transfer

Paying your vendor right from your normal business bank account is an obvious solution. Depending on the account you have and the services your bank offers, you might be able to pay your international vendor using a direct debit or bank transfer.

Fees will usually apply for payments like these, although some US banks do offer business banking packages which include a certain number of transactions monthly as part of the service.

Do check your own bank’s options for making international transfers as you may be directed to use a wire instead, which can be pretty costly. It’s also worth checking if there are any extra per transaction fees for transfers, which will be detailed in your account service fee document.

Pros and Cons of Direct Debit and Bank Transfer

Pros of direct debit and bank transfer	Cons of direct debit and bank transfer
✅Send money online or using mobile banking in many cases ✅Funds are deposited in your vendor’s bank account ✅Some business accounts offer a set number of transfers monthly as part of the package	❌May not be available for overseas payments - your bank may ask you to wire instead ❌Variable fees ❌Exchange rates may include a markup

Costs and speed

	Costs and speed - Direct debit and bank transfer
Transfer fee	Variable fees - check with your own bank
Exchange rate	Exchange rates may include a markup
Speed	Not always the quickest option - ask your bank for a delivery estimate before you transfer

Paper Checks

While paper checks have fallen in use among consumers, they’re still pretty commonly used and accepted by US businesses. However, this isn't necessarily the case the world over - in many countries, paper checks are seldom used, which may mean that this isn't an ideal option for paying an international supplier.

Even if your overseas vendor will accept a check, they’re pretty slow to arrive and risky as you may find your check is lost or stolen en route. Your check also includes a lot of information about the bank account you’re paying from - which means it's a security risk if intercepted.

Pros and Cons of Paper Checks

Pros of checks	Cons of checks
✅Commonly used by US businesses ✅Usually very cheap or free for the sender	❌Not always accepted by international vendors ❌Slow as they need to be mailed and cleared ❌Risky in case of loss or theft

Costs and speed

	Costs and speed - check
Transfer fee	Often very cheap or free for the sender
Exchange rate	Exchange rate may be set by your bank or - more likely - the vendor’s bank, and can include a markup
Speed	You’ll need time to mail the check, and for it to clear once deposited - not the fastest option out there

Credit Card

If you have a business credit card you might choose to use this to pay international vendors if they’re able to accept a payment by card. Credit cards are pretty secure, and familiar to most people - but they can be a quite expensive option when using them for foreign currency payments.

You’re likely to find you pay a foreign transaction fee for example, which could be in the region of 3%. Plus, if your transfer is treated like a cash transaction, your card issuer may start to charge interest on the amount sent immediately. On the upside, though, credit card payments are pretty much instantly delivered, and you’ll be able to spread the costs of your payment out over several months if you want to.

Pros and Cons of a Credit Card

Pros of credit card	Cons of credit card
✅Easy to use ✅Spread the costs of your payment over months ✅You may earn rewards or cash back depending on your card ✅Secure	❌Not always accepted by vendors ❌Fees can be high, including foreign transaction fees and interest ❌Penalties apply if you don’t pay off your bill in time

Costs and speed

	Costs and speed - Credit card
Transfer fee	The sender is unlikely to pay a fee if paying using an online link from the vendor - but interest and other fees can apply If you’re using your card to fund a wire, fees are likely - check with your bank directly to understand what you’ll pay
Exchange rate	Usually you’ll find the network rate is used, plus any applicable foreign transaction fee. While this can be waived, it is likely to be around 3% where applied
Speed	Often very quick for the recipient

Prepaid Debit Card

A prepaid debit card must have a balance before any payment can be made - but it does avoid any danger of racking up interest costs, and can be a cheaper option to pay overseas vendors compared to paying with a credit card.

Different prepaid debit cards have their own features and fees, so you might find that there are foreign transaction fees when you spend in a foreign currency for example. Before you make a payment with your business prepaid debit card you’ll want to read through your account’s terms and conditions to make sure you understand the fees - and check your vendor is able to accept a card payment, as this is not always possible.

Pros and Cons of a Prepaid Debit Card

Pros of prepaid debit card	Cons of prepaid debit card
✅No interest to pay ✅Secure and easy way to pay ✅can make budgeting easier as there are usually no risks of penalties	❌You need to have the money upfront ❌Fees may apply including a foreign transaction fee ❌Not all vendors can accept card payments

Costs and speed

	Costs and speed - prepaid debit card
Transfer fee	The sender is unlikely to pay a fee if paying using an online link from the vendor
Exchange rate	Usually you’ll find the network rate is used, plus any applicable foreign transaction fee. While this can be waived, it is likely to be around 3% where applied
Speed	Often very quick for the recipient

7 Tips to make paying international vendors easier

Let’s round up our guide to the best ways to pay international vendors with a few tips.

1. Set up automatic or recurring payments

There’s no excuse to forget a payment to a vendor with automatic and recurring payments. Your bank or account provider may be able to help you set up regular transfers if you’re paying the same amount at regular intervals - say a monthly retainer to a contractor. Arrangements like this are often free for the sender, and can improve relationships with the vendor as they’ll always know their money will arrive on time.

2. Paying consistently and on time? Negotiate longer payment terms

Build mutually beneficial relationships with your vendors by paying reliably, and you may also find your vendor is willing to accept longer payment terms. Longer payment terms can help cash flow, and also give you longer to hold onto your balance in a savings account, where it might accrue interest.

3. Watch fees on international transfers

Bear in mind that several fees can apply to international transfers which may not always be that easy to spot. Look at the transfer fee your bank or provider quotes you, but also the exchange rate which may include an extra percentage fee added to the mid-market rate you'll see on Google or a currency converter tool. If you’re sending with a bank you’ll also want to ask about possible third party fees which can eat into the amount your vendor gets in the end.

4. Time your international payments for ideal conversion rates

If you’re able to, convert currencies when the time is right, and when rates look good. This is far easier if you have a multi-currency account from a provider like Wise. You can hold global currencies in the same account with Wise, so you’ll be able to convert your USD to the currency or currencies you need for future payments quickly and whenever you see a good rate. Hold your balance in foreign currencies and send payments when they’re due. This can mean you save money in the end.

5. Choose a international bank or financial service provider with high transfer limits

Using a bank or payment service which lets you send higher value amounts without having to visit a branch or split your payment into multiple installments can be cheaper and save you time too. Some providers cap the amount you can send online - which means you have to decide to pay transfer fees more than once, or visit a branch to set up your payment, which may also have higher fees.

6. Find an international bank or financial service provider with instant payments

Don’t keep your vendor waiting - find a bank or provider which can move your money quickly. You may find there are penalties if you pay your vendor late - and even if there’s no financial consequence, it’s not great for your relationship. Choosing a service which offers fast and efficient payments - like Wise which can deposit funds quickly or even instantly - can be better all round.

7. Assess the different international payment options – check if your provider has the best one for you

Compare your options when it comes to paying international vendors. Using your bank might be obvious but it may also be more expensive and slower than using a specialist service such as a multi-currency account from a non-bank service like Wise Business.

Ultimately the only way to choose the right way to pay your international vendors with low fees and fast delivery is to do your own research. This guide will help, with some great suggestions to start you off.

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Sources:

1. Speed: The speed of transaction claim depends on funds availability, approval by Wise's proprietary verification system and systems availability of our partners' banking system, and may not be available for all transactions
2. Pricing/fees: Please seeTerms of Use for your region or visit WiseFees & Pricing for the most up to date pricing and fee information
3. Bank of America business fees
4. US Bank - business pricing
5. Nacha - international ACH
6. US Bank - international ACH