Preferred cross-border payment methods in Europe for B2B businesses
Managing funds can be a difficult task for cross-border B2B businesses, especially in Europe. Cross-border transactions are common in this region, but even though the EU created the Eurozone single currency area, many countries still have their own currencies and regulations.
B2B business owners need to manage a lot of different currencies, banking systems, and financial requirements. Plus, businesses in different countries have different sets of preferences for cross-border payment methods.
B2B businesses are all looking for ways to make and receive international payments that are quick, low-cost, and easy to use, but it can be hard to find something that ticks all the boxes. It isn’t easy to decide between traditional methods like wire transfers, or newer options like ewallets, online banking, mobile payments, and other digital payment solutions.
Here are some of the most popular payment methods for B2B businesses in Europe, to help you choose the smoothest way to manage your business funds.
Credit and debit cards
Credit cards are easy to use and secure, which makes them the most popular choice for international payments. Many countries, including France, Estonia, Portugal, Ireland, and Germany, place credit card payments at the top of the list of cross-border payment options.
However, if you’re receiving funds, it can be frustrating waiting days for credit card payments to clear. Debit card payments clear faster than credit card payments, so they are more popular in some countries, but they are also less secure, and you’re more likely to have limits placed on how much you can transfer in a single payment.
But one big drawback to using either credit or debit cards is the high fees. Most credit card companies charge a fee of 2-4% of the payment, plus an extra fee for cross-border payments, plus yet another fee if you need to convert money to a different currency.
There are a number of different types of bank transfer that you can use for B2B payments in Europe, including wire transfers, online banking transfers, and direct debit. They are mostly used for domestic B2B payments, because there aren’t many major banks that have a presence in more than one country, plus the fees for currency conversion are so high. In Germany, for example, domestic bank transfers and direct debits are very popular, but they aren’t used much for international payments.
Most businesses that do use international bank transfers prefer SWIFT payments, because they are secure, and clear relatively quickly. Europe has a version called SWIFT gpi, which clears funds more quickly and is more transparent. But SWIFT payments are very expensive, especially if you need to convert money from one currency to another.
However, cross-border bank transfers are starting to become less costly and more popular, thanks to new SEPA transfer schemes for businesses in the Single Euro Payments Area (SEPA) which have lower fees and shorter clearing times.
The SEPA Instant Credit Transfer scheme (SCT Inst) is a new standard message format for banks in SEPA to make instant credit transfers in Euros, with funds delivered within 10 seconds. It was introduced in November 2017, and now over 2,000 payment providers in 20 countries offer it. SCT Inst is most popular in Germany, followed by Austria and France.
Another bank transfer method is RT1, run by EBA clearing, which supports instant payments. Also, the TARGET Instant Payments Service (TIPS), is run by Eurosystem for instant payment settlement in central bank money across SEPA. There’s hope that these options will see more takeup soon, but so far they aren’t in very widespread use.
The downside to these SEPA payments is that if you don’t have a bank account in a Euro-currency country, you’ll still have to pay currency conversion fees on your payments, and those fees can be quite high.
There are loads of new digital payment solutions used by B2B businesses. These include ewallets, online payment solutions, and buy now pay later (BNPL) services, like PayPal, Skrill, Klarna, and iDEAL. For the moment, they are more common for B2C payments, or for smaller B2B transactions. They aren’t used much for large cross-border B2B payments.
Digital payments can offer lower fees and faster clearing for funds. They are also simple to use, especially if you’re transferring funds from one banking system to another. For businesses, digital payment platforms that integrate with accounting and bookkeeping software make it easy to prepare tax returns, track expenses and income, and comply with local financial regulations.
But cross-border businesses need to choose their payment solution carefully. Some are only for specific countries or currencies, or groups of countries, so you might need to use a number of different payment solutions for all the different currencies and areas you need. Different digital payment platforms also have different levels of security, so you’ll need to do your homework before you pick a provider.
A more user-friendly approach to cross-border money management
Payoneer offers a low-cost, intuitive online payment solution that makes it easy to make and receive payments in a number of currencies and that cross multiple borders. With Payoneer, you can open a receiving account in GBP, EUR, or USD, and get paid as if you had a local bank account.
Payoneer allows you to receive secure, low-cost SWIFT transactions, bank transfers, and credit or debit card payments, and convert funds from one currency to another for low fees of around 0.5%. Once you have a Payoneer account, you can use it to send and accept funds between other Payoneer users free of charge in over 150 currencies, and the payments clear in as little as a few hours.
You can withdraw funds from your Payoneer account to your local bank account in local currency, or use them for online expenses, or paying remote employees, contractors, and suppliers in their local currency.