Because cross-border payments can make companies highly susceptible to receipt of illegal money, businesses initiating cross-border payouts are subject to regulations in both the originating and receiving countries of payment.
This is new territory for many vendors. Finding a payouts partner that understands these payout restrictions and actively screens transactions against global sanctions lists will keep transacting businesses, and their reputations, out of trouble.
The Patriot Act, for example, requires all U.S. businesses to comply with regulations issued by the Office of Foreign Assets Control. Those that fail to comply, knowingly or inadvertently, are susceptible to significant fines and even legal action.
Certain payouts services will also ensure your enterprise does not exceed the legal thresholds on dollar volume or the number of transactions sent to a country each year, a metric that varies by nation. India, the world’s fastest-growing economy and ripe for receiving cross-border payouts, is one example of a country that can only accept so much capital from an outside entity each year.
International sanctions are not the only legal hurdles that global payouts programs must overcome. Along the same lines of protecting cross-border payment recipients from inconvenience, using a digital wallet to transfer payment poses certain risks to end-users that can turn a budding cross-border relationship sour if not addressed or communicated in advance.
For example, certain countries forbid the "parking" of payment in foreign currency, such as U.S. dollars. Meanwhile, some payouts platforms have encountered claims of tax avoidance when using wallets to move finance overseas by not moving their funds into a domestic bank account or failing to report their earnings correctly. A direct-to-bank payout provider will not only avoid these liabilities but demonstrate a care for the end-user that can translate into referrals and further business development opportunities.
Selecting a payouts provider that works as a partner, not just a service, can make or break a smooth and efficient international expansion. Whether you are a merchant looking to break into a new market, or a marketplace looking to grow its existing roster of international vendors, establishing an effective cross-border payouts foundation is key to short-term opportunity and long-term sustainability.