How to save money when selling internationally on Amazon and eBay

There are thousands of businesses that now sell on Amazon and eBay internationally. With the UK growing to be the second biggest Amazon market in the world after the US, there are plenty of opportunities for businesses to expand to other international marketplaces.

There is however a hidden ‘fee’ that a lot of sellers are not aware of. This is the exchange rate margin that the online marketplaces add on when transferring the seller their international sales revenue. This exchange rate margin is usually between 5-6% which costs the seller £5-6,000 for every £100,000 in international sales. Needless to say this makes quite a dent in your profits, but it is however easily avoidable.

What international sellers need to do is setup bank accounts in the jurisdiction that they sell in. This allows them to be paid in the local currency, then move the money into their home currency themselves. High street banks can offer this service; however there are monthly fees for the bank accounts and the setup process can be lengthy (especially for a US Dollar account).

The solution is a simple and cost effective one; use a currency broker who can set you up with a free collection / receiving bank account. This type of account is basically a ‘virtual’ bank account which businesses can use to collect their overseas revenue in. Unfortunately it does not have all the features of a regular bank account (bank card, interest payments etc), but it is free and can be setup very quickly. Once money is paid into this account from the marketplace you sell through, you can then transfer the money back into your home currency via the broker you have registered with, thus reducing the exchange rate margin down to well under 2% (depending on how much you transfer).

There are several brokers that offer the collection bank account service and each has their own benefits. The best three are listed below for you along with links to each of their websites.

Worldfirst are by far the most popular and well established broker for Amazon sellers and have a huge share of the market. They offer great service and have offices all over the world to handle clients in different countries. Online sellers can setup collection accounts with them in the UK, USA, Canada, Europe and Japan. Worldfirst keep being at the forefront of innovation in the FX world and are definitely worth looking into for any online seller.

UK Forex / OFX have joined the party late in comparison with their rivals in the world of collection bank accounts. They are making up for this however by offering the highest number of currencies and very competitive exchange rates. You can open accounts with them in the UK, USA, Canada, Europe, Australia and Hong Kong. They also offer a 24 hour service, so you can always speak to an account manager on the phone.

Currencies Direct are the final company Currency Pal recommends for online sellers. They do have an advantage over the others in that they are the only company to offer same currency payments. For example; if you sell products in the US and also have a supplier you pay in USD, you can transfer money straight from your collection account to your supplier for a small percentage fee of the total transaction amount (this is called third party to third party payments). This saves you having to exchange your currency twice i.e. USD to GBP, then GBP to your supplier in USD again. Accounts are available in the UK, USA and Europe.

Along with the online seller accounts, you can use any of these companies to pay your overseas suppliers. This means you only have to deal with one company for all your transfers, keeping things nice and simple.

On third party payments, there is something to make note of; Currencies Direct will only have this advantage for a short while longer. As with all the good FX brokers, the others usually catch up sooner or later!

If you are an online seller and are interested in setting up a collection bank account then contact Currency Pal and we will be able to recommend the best company for you to work with based on your own specific needs.

An important note for the future; with Article 50 set to be triggered by the UK at some point before the end of March 2017, you can expect GBP to take a bit of a nose dive when this happens (despite current exchange rates looking like it is already priced in).

Businesses that are affected by currency fluctuations really need to plan ahead, the best course of action could be a Forward Contract. This allows you to fix an exchange rate for as long as 3 years (with some brokers) and will protect you against currency movements which could affect your business. Any of the brokers featured above can offer this service to you, so don’t hesitate to contact an account manager to discuss this option.

contact info@currencypal.co.uk with any queries or visit http://www.currencypal.co.uk


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