How to Pay International Suppliers And Vendors

Key takeaways

• Compare fees, exchange rate markups, speed, and security before choosing how to pay an overseas supplier.
• Use an international wire transfer for a widely accepted bank option, knowing fees often start upwards of $50.
• Consider a letter of credit for large or higher risk orders where you want a bank backed guarantee.
• Choose an online payment service like Melio to pay local and international suppliers from one account with predictable fees.

What to consider before paying international suppliers

Before you send money abroad, weigh a few things that shape the real cost and speed of each option.

• Exchange rates: Banks and providers often add a markup to the mid-market rate, so the headline fee isn’t the full cost.
• Fees: Look for transfer fees, intermediary bank fees, and any charge passed on to your supplier.
• Speed: Some methods settle in a day, others take a week or more.
• Security: Choose a method that protects both your money and your supplier relationship.

Keeping these four factors in mind makes it easier to pick the right method below.

What’s an international wire transfer?

An international wire transfer is a bank-to-bank electronic payment sent across borders, usually over the SWIFT network. Wire transfers’ advantage over ACH is that they aren’t limited to domestic transactions and can be used for international money transfers.

What’s a letter of credit?

A letter of credit is a letter from a bank guaranteeing that the seller will get the money they’re owed once they keep their end of the bargain. That means delivering the goods in the amount, quality, and on the date agreed on.

Letters of credit are popular for international transactions because they reduce most of the risk involved. You don’t put your money on the line, and your supplier knows they’ll get paid because the bank guarantees it.

What are online B2B payment services?

An online B2B payment service is a platform that lets you pay suppliers digitally, often supporting both domestic and international payments in one place. There are many services out there, so it helps to know what to look for.

You have plenty of choice, but you can’t always be sure of a provider’s security or credibility. So it pays to do a little research first.

How to choose the right way to pay international suppliers

The best method depends on your priorities.

• Choose a wire transfer when you need a widely accepted, bank-to-bank option and can absorb higher fees.
• Choose a letter of credit for large or higher-risk orders where you want a bank to guarantee payment.
• Choose an online payment service when you want lower, predictable fees and one place to pay local and overseas suppliers.

For most small businesses paying recurring suppliers, an online service keeps costs low and the workflow simple.

Pay international suppliers the simple way with Melio

Melio lets you pay both local and international suppliers from one account, with the same simple workflow. You get a single flat fee per international transaction and can sync payments with QuickBooks and Xero. Sign up for Melio to start paying your suppliers with less hassle.

International supplier payment FAQs