With the explosion of global cross-border e-commerce, various payment providers are providing sellers with corresponding technical support and services. A rich range of payment methods is one of the focuses, for example, providing sellers with localized payment services.
11.1 Common payment methods for cross-border e-commerce
Current payment methods can be divided into two categories: online payment and offline payment. This section will introduce several commonly used transaction methods.
11.1.1 Telegraphic transfer: suitable for large transactions
Telegraphic transfer is a remittance made by telegram. The telegraphic transfer transaction model is a remittance method in which the remitter first deposits a certain amount of money into the remittance bank, which then sends it to the destination branch or agent bank via telegram or telex, and instructs the remitting bank to pay a certain amount of money to the payee. Telegraphic transfer is a kind of remittance settlement method, which is generally applicable to the transfer of funds between units. Sometimes it can also be used for units to pay relevant funds to individuals in other places, or for individuals to pay relevant funds to units in other places.
The operation process of telegraphic transfer is that the payee or debtor first fills out a remittance application, indicates that the method of telegraphic transfer (T/T) is adopted, and the required amount and payment fees are handed over to the remitting bank to obtain a telegraphic transfer receipt. After receiving the application, the remitting bank examines it. After it is correct, it sends a payment instruction to the remitting bank by telegram or telex, and adds a secret seal agreed by both parties. The remitting bank further examines it, and after it is correct, it prepares a telegraphic transfer notice to notify the payee to withdraw the money. Finally, the payee goes to the remitting bank to withdraw the money with two copies of the notice.
Usually, the telegram fee in the telegraphic transfer is borne by the remitter, and the bank handles the telegraphic transfer business faster, no more than one working day, and does not occupy the remittance funds. Therefore, remittances of larger amounts are generally made by telegraphic transfer.
Among offline payment methods, telegraphic transfer has the advantages of safety and speed. The arrival time of telegraphic transfer is generally two hours, and the latest is one working day. During the wire transfer operation, the buyer needs to fill in the email information, and then go through two rounds of review by the remitting bank and the receiving bank. Finally, the seller can withdraw the money with the notice. This operation method has extremely high security performance. In addition, there is no starting amount limit for wire transfer settlement, the settlement procedures are simple and easy, and the scope of application is wide.
11.1.2 Western Union: Good Security
Western Union is a world-renowned express remittance company with a history of 150 years. Western Union has expanded its business by establishing cooperative relationships with banks around the world. It has currently established 3,640,001 agent outlets in more than 200 countries and regions.
The operation process of Western Union is relatively simple. The remitter only needs to fill in the detailed information at the nearest Western Union cooperative outlet, and Western Union will help complete the rest of the work.
Generally, the remitter needs to fill in the remittance form, then pay the corresponding handling fee, sign and receive the receipt, get the remittance monitoring number to track the remittance status, and finally notify the recipient to collect the money.
When the payee goes to the cooperative outlet to withdraw the money, he must make sure that the payment has arrived. The confirmation can be achieved by contacting the remitter or checking online. At the same time, he must verify the information to avoid mistakes. Then he can go to the cooperative outlet, bring his ID card and the country or region of remittance, the remittance amount, and the remittance monitoring number, fill in the form and sign the receipt to withdraw the money.
One of the characteristics of Western Union is that it is easy to use, because Western Union’s cooperative outlets are all over the world, and most regions can use this payment method for offline transactions, and the procedures are relatively simple. In addition, Western Union remittance arrives very quickly (usually within ten minutes). Finally, the handling fee of Western Union is borne by the buyer, and the seller can withdraw the money first and then ship the goods, which is more cost-effective for the seller. However, for buyers, there is a certain payment risk. Many buyers are worried that the seller will not ship the goods after they pay, so it is not easy to be accepted by most buyers. Moreover, the remittance fee is charged per transaction, and the handling fee for small transactions is high.
11.1.3 MoneyGram: Low Cost
MoneyGram is a remittance agency similar to Western Union. It also expands and operates its business by establishing agent outlets around the world. However, MoneyGram is a global fast remittance service between individuals. Remittance is fast and convenient. Generally, the remittance process from the remitter to the beneficiary can be completed in 10 minutes. Remittance services through the MoneyGram system are currently only handled in US dollars.
The operation process of MoneyGram is as follows: the remitter needs to prepare relevant certification documents required by foreign exchange management and fill out an application form at the MoneyGram counter. After the form is processed, pay the fee in the cash area, and then take the form back to the MoneyGram counter to remit, and keep a copy of the receipt for himself, and finally notify the beneficiary. The beneficiary needs to go to the MoneyGram counter with his own MoneyGram business reference number and identity document, and provide the corresponding materials as required by the MoneyGram counter according to the amount. After verification, withdraw the money and keep a copy of the receipt for himself.
The characteristics of MoneyGram are reflected in the following aspects: First, it is fast. Generally, it only takes 10 minutes to complete the operation procedure; second, it is convenient. Like Western Union, MoneyGram has established 300,000 outlets in 197 countries and regions around the world, which can provide services to people in most regions; third, it is simple. The remitter only needs to fill out a form and does not need a bank account to complete the operation process; fourth, the fees are reasonable. When the remittance amount is not high, the fees are low, and there are no intermediary bank fees and telegraph fees; fifth, it is safe and reliable. On the one hand, MoneyGram has a long history in the field of remittance, and on the other hand, the local banks, post offices and chain supermarkets that cooperate with MoneyGram are all high-quality local banks, post offices and chain supermarket outlets.
However, MoneyGram also has some limitations. For example, the remitter and the beneficiary must be individuals, the remittance must be overseas, and the customer must pay a certain cash exchange fee when remitting money to the account with cash. Compared with Western Union, MoneyGram only handles business on weekdays, no more than 300 days a year, while Western Union handles business all year round. In addition, Western Union’s partner banks can provide customers with VIP window services, while MoneyGram does not.