overseas purchases

Credit cards for overseas purchases

by Angus Jones

A new survey has revealed almost half of Australian SMEs are sacrificing their hard-earned cash in fees and charges for convenience when making overseas purchases. Forty-nine (49) per cent admitted they use their credit cards when spending $2000 or more on a single international purchase, despite credit card fees of up to $90 for each purchase of this size.

The findings were derived from a survey of 202 independent business owners and decision-makers across the full SME spectrum commissioned by comparison service Money Transfer Comparison.

The three most common payment methods for overseas transactions are credit cards, bank transfers, and transfers from specialist international money transfer platforms. However, major banks charge transfer fees of up to $30 in addition to hefty exchange rate markups averaging 2.5 per cent on commonly currencies such as USD, NZD and GBP, and even higher on more exotic currencies. On credit card purchases, Australia’s major banks further slog card holders with currency conversion fees of up to 3.5 per cent. Specialised transfer providers such as Currencies Direct, TorFX and Moneycorp are the cheapest options[1].

Convenience, and a lack of time and knowledge are key reasons for credit card use

The survey revealed a whopping two-thirds (63 per cent) of SMEs automatically make big international purchases with a credit card for convenience, while 31 per cent say they don’t have enough time to search other payment methods.

Almost 20 per cent don’t think other payment methods would give worthwhile savings, 19 per cent don’t know of any other payment methods, and 18 per cent think other payment methods seem too complicated.

According to a recent report commissioned by the Australian Competition and Consumer Commission, international money transfers from Australia are high by global standards[2]. Credit card usage is also on the rise, according to a 2022 survey by the Reserve Bank of Australia (RBA), which shows a quarter of Australians favour their credit card in general for all payments[3].

Russell Gous, Money Transfer Comparison spokesperson, says. “There is a wide range of overseas purchases that businesses – particularly retailers and eCommerce traders – can make regularly. Much of Australia’s goods are sourced internationally, technology and suppliers can be more affordable when sourced overseas, and business travel from Australia has rebounded strongly in the last year.  

“Our survey results speak volumes about the glaring information gap when it comes to making international purchases cost-effectively, and it’s a gap that’s hurting the hip pockets of SMEs. What almost half of SMEs fail to realise is that specialised transfer providers typically offer far better exchange rates than the big four Australian banks, with their transfer fees often 0.3 to 1.3 per cent depending on the size of the transfer. Additionally, they’re remarkably secure, and they’re easy to set up and use. Online spending is on the rise,and significant savings can be made by eschewing banks for third-party transfer sites.”

Micro businesses more cost-conscious, least likely to use credit cards

When asked if they would automatically use a credit card when making overseas payments of $2000 or more, 51 per cent of small businesses (11-50 employees) and 47 per cent of medium-sized (51-200 employees) businesses confessed they’re the most likely to do so.

Overwhelmingly, micro-businesses are the least likely to use their credit cards for overseas purchases of over $2000, at 60 per cent. This compares with 53 per cent of medium-sized businesses and 49 per cent of small businesses.

The full survey results, including breakdowns across different business sizes and States, can be found here: https://moneytransfercomparison.com/australian-business-credit-cards-overseas/.

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