Taking Small Payments from USA

Question posted by Mike Lehan, on behalf of Ground Control Skydiving in M1

I am selling a Software as a Service product worldwide and have just secured my first clients in the USA. The monthly rate is in hundreds of dollars, and at present companies are paying per month rather than a full year in advance, so frequent small transactions.

What would be the best way for them to send these payments over to the UK?

At present I am assuming I will have reasonable oversight over each new client for the next 6 months to a year, so it doesn't matter if it is necessary to spend some time setting up an account/payment method for each client.

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Mike Josypenko, on behalf of The Institute of Export in PE2.

You don't specify what size of businesses your clients are, but from my own past experience of billing small amounts to US companies I find that many companies are happy to make payments by credit card, and willing to forward their card details to allow you to collect payments. Would this work for you?

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Colin Jones, on behalf of Transpact.com in NW11.

Opening and running a simple USD bank account with your bank, and asking your clients to make wire transfer payments into the account, may be the easiest method.
This way, you can wait until you have more than £20,000 of USD in the account, and then transfer the USD to GBP (at this level, you can expect a decent exchange rate from your bank - if they don't offer then fight for one).

Some of the UK banks offer a drop-box account in the USA for receiving payments from the USA - this simplifies payment for your customers, as they only have to make local wire transfers rather than international ones. Check the pricing though.

As Mike Josypenko said, credit card is another solution (but watch our for chargeback bad debts).

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Mike Hunter, on behalf of betterlanguages.com Ltd. in Nottingham.

Hi Mike

I run a small translation company, and we have clients in the US. At our current turnover its not worth the expense of an account in USD, we therefore accept payment either by cheque, (which is a pain as they take a while to receive and cost a bit in bank charges), or by PayPal. Personally I love PayPal for small transactions, your customer can then pay by credit or debit card, and its easy to accept payments in different currencies. They charge a percentage (typically around 2.5%, but it varies), so you need to factor this in as an additional cost. It takes a bit of effort to set up a PayPal business account, but its then easy to use. We've also used Moneybookers, which I've found to be a pain, its so hard to make changes to an account, and you can only have the account in a single currency. Nowhere near the flexibility of PayPal. There are other alternatives like Worldpay, but I don't have experience of them.

Hope this helps.

Kindest regards
Mike

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Colin Jones, on behalf of Transpact.com in NW11.

I disagree somewhat with Pardeep.

1) If you are receiving thousands of dollars overall from the USA, you might take a significant fx hit if you receive payment by credit card, as the fx rates you receive may well not be favourable. And you will also be losing a significant added percentage in credit-card fees.
2) Further, as already mentioned, credit control is seemingly resolved by credit card, but credit-card chargebacks (which can occur up to 18 months after payment) have significantly damaged many unsuspecting businesses.

If you are concerned about credit control, you may be better off using one of the low-cost online escrow services which take payment routinely from the USA. These can also offer you easy USD collection and conversion into GBP (one such offering, for example, is Transpact.com).

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Dear Mike,
The quantum of money to be transferred from US to UK was not mentioned in your query. However the bank to bank transfer from your buyers account in US to your account in UK can be done via a bank or an authorised foreign exchange dealer. Obviously the banks will charge a higher fee compared to a foreign exchange dealer while you may receive a better exchange rate as from a exchange company.

We are a foreign exchange company with 20 years of experience in this line of business. We are approved by Financial Services Authority, the financial regulator and regulated by HM Revenue; our corporate services are extended to staff of Department of Trade and Industry, Deputy Prime Minister’s Office, members of number of embassies and many other Government Sections for the last ten years.

We service our customers from five delivery channels at Victoria Street, The Strand, Liverpool Street, Hammersmith and Cannon Street which are conveniently located and easily accessible to our clients in addition to our online customer base.

The independent comparison site money Savings Experts rank our rates as the best in the market in almost all currencies we deal with.

With regard to the corporate customers like your business we assign a dedicated foreign currency manager who will assist you through the entire process of financial transaction and support you in the process.

As such I would be pleased to discuss our potions with you in detail and to offer you the rates available with us for a comparison with your bankers, for you to evaluate the cost benefits.

Warm regards,

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Bobbie Charleston-Price, on behalf of UKTI North West in North West.

Dear Mike,

We would recommend that you speak to your bank about opening a USD account so that the money can be simply transferred from your customers in the USA. You can go about this by speaking to the international department of your bank,

Kind Regards,
Bobbie

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Trevor Charsley, on behalf of AFEX in WC2N.

Hi Mike,
To save the credit card issues with charge backs I would recommend opening up a USD account to receive the payments and then keeping the funds until you get to $15k or $20k. You can then do the Foreign Exchange via a regulated FX Broker/Payments Provider to get a decent exchange rate.
AFEX can help you do that, as well as provide a market watch service to help you time your
exchange to your needs and help you achieve a benefical rate.
All the best with it.
Trevor

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