Ola Oyetayo | How SMEs can maximise profits through cross-border payments
Business owners in South Africa are no strangers to the challenges of running SMEs. The market is competitive, costs are ever-increasing, and navigating cross-border transactions can be a headache. However, there's good news: small businesses can significantly increase their profitability and grow their businesses faster by finding the right cross-border payments provider.
When expanding a business beyond South Africa's borders, one of the most significant challenges faced is the high cost associated with cross-border transactions. Traditional banking institutions often charge exorbitant fees for currency conversion and international transfers. These fees can quickly erode hard-earned profits, leaving owners with less to reinvest in their businesses.
On average, traditional banks can charge up to 5% to 7% on cross-border transaction fees, making it an expensive endeavour for SMEs. Similarly, the FX rates offered by traditional banks often need to be more favourable, leading to losses in currency conversion. These rates can be 2% to 5% higher than market rates.
By offering solutions to these cost-related woes, the right cross-border payment provider can save business owners money through low foreign exchange (FX) and transaction costs, allowing South African SMEs to realise substantial savings and repatriate profits more efficiently.
Lower Transaction Costs: Many payment providers offer competitive pricing structures, with transaction fees as low as 1% to 2%. This translates into significant savings when conducting multiple cross-border transactions.
Favourable FX Rates: Cross-border payment providers often offer exchange rates close to market rates. This minimises the impact of currency fluctuations and maximises the value of business earnings when converted back to South African Rands.
By choosing the right cross-border payment provider, South African SMEs can not only save money, but also unlock the potential for faster business growth:
Efficiency: Faster transactions and reduced administrative hassles mean owners can focus on growing their businesses rather than dealing with complex financial logistics.
Global Expansion: Cost savings on cross-border transactions can be channelled into exploring new markets and expanding business operations beyond South Africa.
Competitive Advantage: Lower costs enable a business to offer competitive pricing and gain a competitive edge in international markets.
In an increasingly globalised world, South African SMEs must seize opportunities beyond their borders. Finding the right cross-border payment provider is not just a matter of convenience, but a strategic decision to enhance profitability and facilitate business growth.
The data and statistics clearly indicate the potential for significant cost savings, making it a smart move for any business owner in South Africa.
*Ola Oyetayo is Verto Co-Founder and Chief Executive Officer