Foreign Currency and Overseas Banking Services

for Online Sellers (Amazon, eBay, Ali, Rakuten or others)

If you are selling online and catering to an international audience, you must have realised by now that you will be spending vast amounts of money on foreign exchange fees and potentially losing buyers or narrowing your profit margins.

Did you know?

  •  If you are selling on Amazon and using their default setup, you will lose up to 4% of your sales in foreign exchange fees when using their Amazon Global Seller Program.
  •  If you are using eBay, your items will appear more expensive than their listed price for international buyers (due to Paypal’s high currency exchange fees, even if you transfer money from Paypal account to your Transferwise account).
  •  If you use your bank to exchange overseas funds to domestic currency, it may cost you up to 5% of the lump sum.

Selling internationally is somewhat complex and and expensive as it is, but nevertheless – a necessity. Using the right services together with your seller central tools can and will help with the complexity and related fees. This guide will explain the ins and outs of alternatives to Amazon’s currency exchange via its Global Sellers Online centre, eBay’s currency exchange fees, or other high-cost solution offered by eCommerce marketplaces.

Your Savings using Online Seller FX Demonstrated

Annual TurnoverAmazon Currency ExchangeSpecialist ProviderSaving
$10,000$400 in currency fees$150-$200 in currency fees$200-$250
$50,000$2,000 in currency fees$500-$750 in currency fees$1,250-$1,500
$100,000$4,000 in currency fees$500-$1,000 in currency fees$3,000-$3,500
$1,000,000$40,000 in currency fees$5,000 in currency fees$39,500


Notes: The table above is not marketplace specific. The currency exchange services for online sellers can be applicable to your business regardless of whether you sell on Amazon, Ali Baba, TMall, Overstock, eBay, Ubid, Bonanza, or any other online marketplace. The figures used in this table are only meant to demonstrate what could you could potentially save; They use 4% as the base figure for currency exchange fees, and 0.5%-1% in foreign currency fees when choosing a specialist provider – this is not necessarily what you’re paying at the moment, or what you’ll be paying with a currency provider, but rather a rough figure based on Amazon’s FX fees and information supplied by currency providers.

Top Recommended Services for Online Sellers 2019

The following services provide the functionality of opening collection accounts on your behalf abroad, transferring funds accumulated in such overseas sub-accounts back into your back account in domestic currency, and the ability to transfer money abroad for payments for a fraction of what banks charge.

World First
  • Collection bank accounts abroad - USA, Canada, UK, EU, Singapore, Japan and China
  • Applicable with all marketplaces
  • Foreign Exchange Markups: From 0.5% – 2% – Depending on volumes.
  • Outbound payments to suppliers in 121 currencies
  • Hedging derivatives Such as forward contracts (3 years), limit orders
  • Company rating: 95.2% The best rated company since 2014 on MTC.com.
OFX Money Transfer
  • Collection bank accounts abroad- USA, Canada, UK, EU, New Zealand, Hong Kong and Australia
  • Applicable with all marketplaces
  • Foreign Exchange Markups: From 0.5% – 1.5% – Depending on volumes.Special markups for our readers
  • Outbound payments to suppliers in 155 currencies
  • Hedging derivatives Such as forward contracts, limit orders
  • Company rating: 90.4% Progressively improving rating since 2014. Top 5 best companies.
moneycorp
  • Collection bank accounts abroad in the EU
  • Applicable with all marketplaces
  • Foreign Exchange Markups: Up to 0.75% Depending on volumes.
  • Outbound payments to suppliers in 40 currencies
  • Hedging toolsSuch as forward contracts, limit orders
  • Company rating: 92.8%

Marketplace Availability

Business Case – John’s Tin Cans

imageedit_1_8833290386Meet John. John is an online seller/etailer from the UK. He buys tin containers from China on wholesale for $0.5 (or approx. 3.19 Chinese Yuan, depending on current exchange rate). He pays his supplier via bank wire in USD, exchanged from his UK GBP account – half of it is on a net 30 basis, and half is paid as soon as the items are delivered to John’s storage in the UK.

John buys 50,000 units a month, for an estimated $25,000.

He sells on Amazon via Amazon’s Sellers for a nice 50% profit margin per unit, at $0.75 (or equivalent in local currency) each. 80% of John’s sales are outside of the UK, and he conducts them through Amazon Global Sellers Online centre.

 

Potential Earnings

In theory, John should be earning $12,500 or approx. £8,250. That, when you take shipping, manpower, infrastructure and accounting costs into consideration, John’s profit margin is approximately 35% which means net profit of $8,750 or £5,760.

 

De-facto Earnings

John’s profit margin is slashed after taking the banking costs of his operation – supplier money transfers, and Amazon money transfers.

John pays his suppliers abroad twice a month. That costs £35 per transfer, and the exchange rate he is getting from his high street bank is 3.5% worse than the current rate. That means approximately $1,000 in FX fees for suppliers.

John receives his sales from outside the UK with a 4% markup, as dictated by Amazon Global Selling. As John sells for $30,000 overseas, those 4% mean approximately $1,200 just to receive his proceedings from abroad.

In total, John pays $2,200 every month in money transfer fees.

De-facto Overall Profit: $6,550
De-facto Profit Margin: 0.262%

 

Conclusion: John overpays in banking fees

Switching to currency providers as per our recommendations will yield tremendous saving.

Outbound payments: John will be paying absolutely no fixed fees on money transfers abroad, and using a standard 1% margin (or lower) for the currency exchanges, he will end up paying less than a third of what he was originally paying.

Receiving payments: Instead of using Amazon’s currency services, John will have collection bank accounts in the USA, Asia and Europe. He will accumulate all his revenues in those accounts in their domestic currency, and whenever he decides to – his specialist currency provider will be able to exchange all the funds into a currency of his choice transferred into his local bank account, with 1% margin applied (or less). Again, he will lower his associated fees by more than two-thirds.

With an eCommerce specialist currency broker, John’s profits will improve by a whooping 24%.

New Overall Profit: $8,150
New Profit Margin: 0.325%

Do you require more information on those Amazon alternatives?

Committing to work with an external provider in something as delicate and sensitive as foreign currency bank accounts abroad or overseas money transfers is never easy. As a business owner, you must have had bad experiences with certain providers – so did we at Money Transfer Comparison.

This is why our recommended online seller foreign exchange services are only 2 companies, which are considered as top-tier in this foreign exchange industries. Both of these companies move many billions of dollars in foreign currency every year, operate for at least 15 years, and boast servicing tens of thousands of corporate clients each year. For your convenience, we have created thorough reviews of these companies and the service they are offering –

1) World First Online Seller Review

Trading via: Online Platform Email Telephone
International Clients accepted
Established: 2004
Currencies offered: 121

“All you need to do is open World First bank accounts in US dollars, Canadian Dollars or Euros. You can then take advantage of World First’s much better exchange rates and, if you don’t need the cash immediately, hold it in those bank accounts until rates are favourable and then transfer it into your own sterling business account.“ – John Clark, Rapid Eyewear

95.4% Editorial rating.
7.000
Aggregated reviews
98%
Level of Satisfaction
4
Industry Awards
2015-2017

 

Bank accounts available in UK, France, Germany, USA, and Canada, as well as Singapore, China and Japan (recently added).

2) OFX Online Seller Review

Trading via: Online Platform Email Telephone
International Clients accepted
Established: 2005
Currencies offered: 55

OFX is a publicly traded money transfer giant with $20bn in annual turnover and market cap in excess of $400m. In recent years, OFX which has been traditionally servicing small businesses of all sizes, started making conscious effort to improve its appeal for online sellers. Nowadays, it has the most diverse collection account offering of all currency providers.

90.4% Editorial rating.
1.300+
Aggregated reviews
90%
Level of Satisfaction
4
Industry Awards
2005-2011

Bank accounts in USA, Canada, UK, Europe, New Zealand, Hong Kong and Australia.

3) Moneycorp Online Sellers Review

Trading via: Online Platform Telephone
International Clients accepted
Established: 1962
Currencies offered: 40

“Moneycorp is the first money transfer company of its kind which has launched its unique offering for sellers in 2019. The offer is limited currently with accounts only in the EU and USA, but they are offering the lowest margins with up to 0.75% per transaction”.

92.8% Editorial rating.
4.800+
Aggregated reviews
92%
Level of Satisfaction
3
Industry Awards
2011-2015

Bank accounts in the EU and USA for now.

Added values of FX services for international sellers

Companies like World First or OFX provide whoever chooses to use them with a lot more than simply moving money from point A to point B. It’s not only about improving the poor currency exchange rate offered by Amazon’s Global Sellers Program or improving your eBay seller account’s value proposition to overseas buyers. Both of these companies are happy to provide customers with dedicated account managers who become an integral part of your business – they can assist on the right time to exchange certain currencies, suggest hedging solutions tailored to your business’ needs, and even help on topics relating to selling internationally online based on their experience escorting many clients like yourself.

For example, we heard of cases where representatives from these companies have helped online sellers on Amazon reduce their Amazon Seller fees above and beyond the Amazon Money Transfer; they helped them understand the costs of Amazon FBA and suggested a local solution that other clients of theirs recommended.

Additionally, the power of opening a foreign bank account abroad, and accepting payments in foreign currency into your a bank account is simply unparalleled in the money transfer and currency exchange industry. Very few companies have the same capabilities when it comes to online sellers as these two companies. Here is a recap of what these companies are able to do:

With World First You canWith OFX You Can
Open USD accounts from UKOpen USD accounts from UK
Open USD accounts from AustraliaOpen USD accounts from Australia
Open USD accounts from EuropeOpen USD accounts from Europe
Open EUR accounts from UKOpen EUR accounts from UK
Open EUR accounts from USAOpen EUR accounts from USA
Open EUR accounts from AustraliaOpen EUR accounts from Australia
Open CAD accounts from USAOpen CAD accounts from USA
Open CAD accounts from UKOpen CAD accounts from UK
Open CAD accounts from AustraliaOpen CAD accounts from Australia
Open foreign bank accounts in ChinaOpen foreign bank account in New Zealand
Open foreign bank accounts in JapanOpen foreign bank account in Honk Kong

Will using alternatives to Amazon’s currency exchange make me a successful online seller?

So far, this article has touched a single (important) topic relating to selling online with a particular focus on international sellers. With that being said, by paying the least commission on international money transfers without having a solid business model, you will not be a great Amazon seller.

Below you can find 7 more tips that can guide you in the right direction when selling your merchandise online, and particularly to international audience:

1) Use local pricing

Using the current exchange rate to determine the local price of your products in domestic currency doesn’t always work. In some countries certain items are cheaper and in some countries they are more expensive. It all depends on the local competition!

2) Focus on reliable shipping with reasonable pricing

Amazon and eBay have great international shipping programs but they are often too reliable. For example, did you know that buying from Amazon in the middle east means almost $30 in shipping? if you are selling items that cost dozens of dollars, you are losing out on all potential customers in that region. Similarly, eBay’s international shipping program can cost up to $40 for the smallest of items (whereas using UK Post or USPS can slash that cost by a lot).

3) Use local language descriptions that make sense

Too many online sellers insist on using automated software to translate their listings. It doesn’t work and locals are likely to think it’s a scam.

4) Consider drop-shipping

If your product is manufactured overseas anyhow, why not store it in the country where it is manufactured and ship from there?

5) Expand outside of eBay, Amazon, Ali and the marketplaces

Customers always like to see that you have a “store” outside of eBay. It helps establish trust that you are indeed a serious vendor rather than someone’s side hustle on eBay.

6) Local customer support

This one is tricky but can perhaps be addressed by using a third party provider to simply accept calls and emails and transfer them to you, translated. People view local support as the ultimate sign of trust because normally, only big companies offer multi-language support.

7) Advertise and market your product the way locals do it

Many online sellers and businessmen mistakenly believe that an advertising campaign that worked in one locale will work globally, but it isn’t so. Cultural differences make a huge difference in the buying decision making process – and hence, marketing and advertising have to be adapted to the local preferences.

Want to learn more about selling overseas? view our overseas product pricing guide for online sellers!

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