Online remittance : An overview of financial remittance services

Cross-border merchants often need to make payments with overseas customers or consumers and challenges like fluctuations in exchange rate, fees, and the speed of transfer are no stranger.  Are there any alternative options that are simpler, more cost-effective, and enable businesses to efficiently exchange foreign currency and remit funds to both mainland and overseas destinations?

Popular local remittance options and transfer services in Hong Kong

Types and Features of Remittance Services

1. Sending money via traditional banking services

Remittance amount limitation: In general, traditional banks do not impose a limit on the amount of remittance, although larger transfers might lead to specific approval procedures or the submission of relevant documents for completion.

Remittance fees are typically charged by banks on a per transaction basis. It is crucial to be mindful of any additional fees imposed by intermediary or receiving banks. While some banks have introduced fee waivers for overseas remittance in recent years, these waivers are usually limited to a few major currencies or designated countries, and may require the recipient to have a local account with the same bank.

Safety and Convenience: For years, traditional banks have earned our trust with their secure remittance services. However, having the need to visit a branch for remittance is inconvenient and time consuming, mainly due to its long waiting time.

Processing Time for remittance: When sending international remittances through traditional banks, the process often involves multiple intermediary banks and clearing systems, resulting in longer processing times. As a result, it may take several business days or even longer for the funds to be credited to the recipient's account.

2. Online Banking Remittance and Transfer

With the rise in popularity of online banking, businesses now have the convenience of remitting and transferring funds online. The advantages and disadvantages of online remittance are outlined below.

Advantages

• Highly convenient: Customers can conveniently process remittance transactions using online banking anywhere, anytime, as long as their computers or mobile devices are connected to a stable network. By eliminating the need to physically visit a bank branch, online banking saves valuable time.

• Low transaction fees: In general, online banking offers significant advantages for cost control as the transaction fees are lower than physical banks.

• Enhanced security: Multiple encryption technologies and identity verification methods ensure the utmost security of transactions.

Disadvantages

• Limit on transaction amount: Some banks may set daily or per transaction limits for online remittance.

• Requirement on internet connectivity: While online banking is not restricted by location and time, it relies heavily on a stable internet connection to complete transactions successfully .

• Technical issues: In the event of occasional system maintenance or platform failures can hinder users' ability to make remittance, even if the downtime is just a few hours

Can I open an offshore account online and make local remittance?

Different banks offer various foreign currency exchange services, but not all of them facilitate online currency exchange for overseas remittance. As a result, cross-border businesses have turned to opening offshore accounts as an alternative.  

This approach minimises the need for currency exchange, reduces the cost per remittances, and mitigates the risk of foreign exchange exposure. However, not all banks are equipped to handle offshore accounts, and in some cases, it may be necessary to personally visit the local area to open an account. Even if your local banks can provide offshore account services, it is important to consider the following application and account opening requirements.

1. Account opening deposit and minimum balance: Each bank has specific requirements regarding initial deposit and minimum balance. It is crucial to ensure that the minimum balance can be maintained while also managing the company's cash flow before opening an account.

2. Bank charges: Opening an offshore account may involve certain fees that should be understood and considered in advance.

3. Time required for remittance: If you need to transfer funds from an offshore account to another country or back to a local account, it is important to note that the time involved in cross-border remittance may vary based on the banks and financial institutions of different countries.

4. Taxation: Tax implications for opening an offshore account and conducting cross-border remittance should be taken into account.

5. Multiple Accounts: If a company requires frequent business transactions in multiple countries, it may be necessary to open multiple offshore accounts to meet the demands. Managing those accounts might lead to additional administrative work and pose challenges for financial management.

Requirements, procedures, and the steps for corporate cross-border remittance 

Transferring corporate funds to Mainland China

While remitting from a Hong Kong (HK) company to Mainland China does not entail foreign exchange control, different requirements and procedures are still required based on the currency involved.

For Chinese Yuan (CNY), Mainland companies must undergo a one-time registration in the Renminbi Cross-Border Receipts and Payments Information Management System (RCPMIS) before they can receive overseas remittances in CNY.

For other foreign currencies such as US Dollars (USD), Hong Kong companies can make direct remittance as long as the Mainland China company's account supports the currency. However, if the amount exceeds USD 50,000, HK companies will need to provide contracts, invoices, or other transaction documents for processing.

Transferring corporate funds to US

Currently, the US does not impose any foreign exchange controls.  This means that funds can freely flow in and out without the need for declaration. However, it is important to note that remittances must be made directly to a checking or savings account, and it is not permissible to send USD to a brokerage or intermediary bank.

Transferring corporate funds to Europe

Each European country has its own unique set of regulations governing remittance, which are tailored to match with their specific financial system and regulatory needs.

How do I choose the right corporate remittance service?

In addition to remittance services from traditional banks, remittance platforms present an alternative solution that offers advantages in terms of cost, remittance speed, and supported currencies. To make an informed decision, it is advised to take the following six key factors into account:

1. Fees: Service charges directly impact the cost of remittances.  Please be aware that different platforms charge differently so take note of any additional or hidden fees such as transaction fees and charges for transfer or receiving funds.

2. Remittance speed: For cross-border trading companies, fast remittance services are often necessary. It is advisable to choose a platform that can process both single and batch remittances quickly to ensure smooth operations.

3. Reliability of the platform: Choosing a reputable and reliable remittance platform is of utmost importance. This ensures the security of funds and safeguards the interests of the company and its customers.

4. Customer service: The customer services team of the remittance platform plays a vital role in delivering prompt and efficient assistance to address any technical issues or challenges. that may arise. Their role is crucial in ensuring timely support and effective solutions.

5. The support of currency conversion: For companies operating in multiple regions and countries, it is essential for the remittance platform to support multiple currency conversions, as this sets the stage for future business expansion and growth.

6. Network security: Ensuring the security of online remittance services is paramount, particularly in light of the escalating cyber threats. Therefore, it is vital to select a remittance platform that offers robust network security and cutting-edge financial technology to avoid monetary loss and data breach.

Airwallex — the third-party platform for corporate and online remittance services

Airwallex is a professional remittance company that supports all walks of businesses. Our wide range of features allow businesses to streamline global payments and remittance. Whether you're a small business, a freelancer, or a large corporation in need of bulk international remittances, Airwallex offers fast, efficient, and cost-effective solutions for all your remittance needs.

Airwallex's user-friendly online remittance platform currently supports over 46 currencies worldwide, and remittances can be completed within seconds. Exchange rates are real-time, transparent, and often more competitive than traditional banks.  Corporate account holders can effortlessly conduct transactions and international remittances with affordable fees, without any hidden costs, from virtually anywhere and at any time.

Additionally, Airwallex has forged partnerships with over 60 global banking partners and is regulated by the Hong Kong Customs and Excise Department. Our security system includes the global's highest level of security certification, multiple encryption, and identity verification technologies. Rest assured, your funds and data are safeguarded as we facilitate seamless and swift transactions.

Click here to learn more about Airwallex's Global Account.