Bangladesh is one of the world’s fastest-developing countries, and it’s quickly becoming a popular outsourcing destination. The Bangladesh government is investing heavily in developing a digitally-native workforce that’s skilled in IT support, software development, and advanced technologies like artificial intelligence (AI), cybersecurity, and blockchain.
Bangladesh is second only to India for skilled contractors for the global market, and the low cost of living there makes it attractive for employers looking for ways to keep their expenses down. The country is 5-6 hours ahead of Western Europe, 11 hours ahead of the US East Coast, and 14 hours ahead of Silicon Valley, which is useful if you need to provide round-the-clock customer support.
But if you want a good relationship with your Bangladeshi contractors and remote employees, you need a way to streamline and organize your cross-border payments. Your service providers need to get paid on time and be able to easily access their funds, you want to track payments and save time on payment management, and nobody wants to leak money on international payment fees and poor currency conversion rates.
Here are some of the ways that businesses pay their employees and contractors in Bangladesh.
You can use international SWIFT bank transfers to send money to a business account in Bangladesh, but SWIFT payments frequently take many days to clear, come with high fees of as much as $50 per payment, and are difficult to track, so if your payment goes astray you may never know what happened.
Barely any Bangladeshi banks offer foreign currency accounts, so if you can’t pay your contractors in the local currency of Bangladeshi Taka (BDT or Tk), they’ll have to pay high conversion fees. For example, at the Islami Bank Bangladesh Limited (IBBL), foreign currency transactions can cost up to 3Tk, or 0.9% of the total per transaction. The Dutch-Bangla Bank Limited (DBBL) charges 100-500tk for foreign currency transactions and withdrawals, depending on your withdrawal method and amount. Local branches of HSBC charge 3% markup on exchange rates for currency conversion at an ATM, and $5.5 for a foreign currency demand draft.
But once the funds are in local currency, bank withdrawals are usually free, depending on the withdrawal method.
Sonali Bank is one of the most popular banks for international payments, and it has its own international payments system that lets you send funds from the US and converts it to BDT. However, you’ll have to pay a commission of $2-8 each time, depending on the payment amount, and you can only use it from 5 states in the US, from the UK, Hong Kong, Singapore, and Dubai.
PingPong is a popular cross-border payments solution that focuses on ecommerce businesses in South-East Asia and China. It offers multi-currency business accounts to help Bangladeshis to streamline their business payments and pay less for foreign currency conversion.
Users can store funds in the online wallet and then use them to make their own online business payments, or transfer money to their local bank account.
However, payments through PingPong take around one working day to process, and fees can add up, with a fee of 3% on every cross-border payment and a markup of 3.99% on foreign exchange rates.
Wise is a well-known international payments solution that’s available in dozens of countries worldwide. There are plenty of ways to send payments — through your credit or debit card, using ACH bank transfer in the US, or through an international wire transfer.
Your Bangladeshi contractors can receive funds in their bank account, to a finance wallet like bKash, or onto their credit card. Wise payments are quick, processing in real time or 1 business day, depending on how the contractor chose to receive the money, and fees are transparent, varying between 0.7% and 1.87% depending on the amount and the payment method.
The big drawback to using Wise is that it’s only available for person to person payments in Bangladesh. You can’t use Wise to send business or commercial payments to Bangladesh. What’s more, Wise has a limit of $4,500 per transaction for individual accounts.
Xoom, which is owned by PayPal, offers another way to pay Bangladeshi contractors and remote employees. You can use it to send payments to bank accounts or mobile wallets like bKash, or for cash pickup at certain locations in Bangladesh.
Payments process in minutes for cash pickup and most mobile wallets, and within hours to some bank accounts like Sonali bank, although payments to accounts at other banks can take a couple of days to clear.
Xoom’s fees are transparent and clear, but they can be high, averaging around 4% with a 0.78% markup on foreign exchange rates. There’s a maximum payment limit of USD6,000 / CAD5,000 / EUR4,000 per month, which may be difficult for some larger companies, although you can raise your monthly limit to USD60,000 / CAD90,000 / EUR50,000 by providing additional information to verify your account. You can only use Xoom from the US and Canada, the UK, and certain European countries.
It’s an even bigger problem that Xoom is only for person to person payments; you can’t use it for commercial or business payments.
Alternatively, you could use Payoneer to send payments from 190+ countries to your employees, contractors, and freelancers in Bangladesh. Payments go through a local transfer for low fees and at competitive currency exchange rates, and you won’t have to pay any corresponding charges like you do for bank transfers.
You can easily send payments from the balance in your Payoneer account, or connect a US or Canadian bank account, or a credit card from anywhere in the world. Funds clear instantly when you make a payment from one Payoneer account to another, and it takes as little as 1 working day if you’re sending money to a bank account in Bangladesh.
Once your payment arrives, recipients can withdraw it to their local bank account or their bKash mobile account, or withdraw it at any ATM using their Payoneer card, without expensive transfer or withdrawal fees. If they prefer, they can keep it in their Payoneer account and use it to pay their own online business costs, send global payments to bank accounts or Payoneer accounts for free, or use their Payoneer card to spend the funds when they travel, to save on foreign currency fees.
Payoneer also makes it simple to pay people in Bangladesh. You can automate recurring payments to make sure you’re never late to pay, pay multiple recipients with a single click through batch payments, and either respond to a payment request or initiate the payment yourself. Track a payment all the way to the recipient for greater peace of mind.
What’s more, Payoneer has a dedicated customer success manager to help Bangladeshi contractors and businesses access the government’s 10% cash incentive for companies in Bangladesh which provide outsourced IT/ITES services.
It usually costs less to send money to contractors, employees, and freelancers in Bangladesh through Payoneer than through other payment methods. In contrast, you’ll pay fees of up to 6% through money transfer services like Western Union or traditional bank transfers.
Using Payoneer also helps you manage your business more smoothly. When you connect your credit card, or your USD or CAD bank account, you won’t have to worry whether you have enough funds in your account before authorizing payments. You can also use the batch payment function to pay all your Bangladesh recipients with one click, or automate payments to take the entire issue off your to-do list and spend more time on other business tasks.
Payoneer also helps improve your reputation as an employer in the competitive Bangladesh outsourcing markets, because you always pay on time, your payments are transparent and reliable, and you give recipients flexibility about how to use their funds. They can keep money in their Payoneer account and use it to pay web hosting fees, Facebook and Google ad payments, or other online costs, or withdraw it in BDT, USD, or another 150+ currencies at competitive rates. Your Bangladesh IT and ITES contractors can also benefit from Payoneer’s help in receiving the government’s cash incentive for outsourcing companies.
Last but definitely not least, Payoneer brings transparency to your cross-border payments. You know exactly what you’ll have to pay and what your employees and contractors will receive before you hit send. There are no hidden costs, and you and your recipients can track each payment every step of the way.
Payoneer helps make it easy and cost-effective to send transparent, secure payments to your freelancers, employees, contractors, or other business partners in Bangladesh. Your payees will be happy to have funds that clear quickly and can be used in flexible ways, and you’ll benefit from having more time to spend growing your business.
[1] According to eligibility and current Payoneer offering