Challenges Irish Import and Export Businesses Face When Making or Receiving Foreign Currency Payments
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International trade is the backbone of many Irish businesses, but importers and exporters face unique challenges with cross-border payments. Issues such as hidden fees, fluctuating exchange rates, and complex payment processes can significantly impact profit margins. Addressing these obstacles is essential for businesses seeking to remain competitive in global markets.
Currency Conversion Costs
Import and export businesses are particularly vulnerable to exchange rate fluctuations. Many banks offer uncompetitive FX rates which can erode profits. Small and medium sized companies, in particular, often lack access to hedging services like FX Forwards, leaving them exposed to sudden currency volatility. For exporters, a weakening euro against major currencies may be beneficial, while importers face increased costs when purchasing goods from abroad.
High Payment Processing Fees
Cross-border transactions can carry hefty fees, with some urgent payments costing up to €50 per transaction. This can add up for businesses processing multiple international payments each month. Importers dealing with frequent overseas suppliers and exporters managing numerous foreign invoices require lower-cost payment options to protect their margins.
Lack of Dedicated Account Manager
For many Irish businesses, the absence of a dedicated banking relationship manager can be a significant hurdle. When payment issues arise, resolving them without personalised support can be time-consuming and stressful. Importers and exporters dealing with time-sensitive transactions require a reliable contact point to ensure smooth payment processing and avoid costly delays.
Transaction Delays
Slow payment processing can disrupt supply chains and delay shipments, affecting cash flow and customer relationships. Differences in banking infrastructure, incorrect payment details, and stringent regulatory checks can add days or weeks to international transactions. Importers relying on just-in-time inventory management and exporters needing prompt payments must streamline their payment processes to remain competitive.
Regulatory Compliance
Import and export businesses must navigate complex regulatory requirements, including anti-money laundering (AML) laws, sanctions, and tax obligations. Compliance can be overwhelming, particularly for companies with limited resources. Failure to adhere to international regulations can result in penalties, further increasing operational costs.
Fraud and Security Risks
Cross-border transactions expose businesses to security threats such as payment fraud and cyberattacks. Figures from FraudSMART, the fraud awareness initiative led by Banking & Payments Federation Ireland (BPFI), show that SMEs lost almost €10m (€9.9m) through email-related fraud in 2023, including invoice-redirection and CEO impersonation scams with cases rising by 25%. Businesses need to implement robust fraud prevention measures to safeguard payments and protect their supply chains.
Limited Access to Payment Options
Many Irish businesses struggle with restricted access to international payment methods, limiting their ability to negotiate better pricing. Importers dealing with suppliers in China, India, or Latin America often face difficulties paying in local currencies, while exporters risk losing customers if they cannot offer diverse payment options.
Impact of New US Trade Tariffs
The possible introduction of new US trade tariffs on goods from the EU poses additional risks for Irish exporters. Increased tariffs can lead to reduced demand for Irish goods, making price competitiveness a challenge. Furthermore, currency volatility often follows trade policy changes, impacting exchange rates and increasing financial uncertainty. Exporters could consider adopting hedging strategies such as forward contracts to mitigate risks associated with FX fluctuations.
How Fexco can help your business with these challenges
Killorglin based Fexco International Payments provides cost-effective, transparent, and secure foreign currency payment solutions so that businesses can enhance their financial resilience and maintain strong global trade relationships. Through its innovative payments platform and global banking network, Fexco enables companies to send funds in over 130 currencies to almost 200 countries worldwide, and removes the high costs associated with traditional banking cross-border payments.
To find out more about how Fexco can help you to save on foreign currency payment costs and offer a more seamless, efficient cross border payment experience, talk to John Barry today or visit https://internationalpayments.fexco.com/
John Barry
Payments & FX Consultant
Fexco International Payments
Direct Dial: +353 (0)66 9799041
