How Prepaid Services Supporting Low Value Transactions
It is undoubtedly clear that Export and Import markets are very integral part of most economies. Many countries, as well as individuals, depend on either exported or imported goods or services to sustain themselves. Consequently, there has always been a strong interdependence between countries that are involved in this kind of trade.
Export and import business being interrelated, often use similar and basic payment methods that are deemed convenient to their businesses. However, with the emergence of many payment systems in the recent past, players in this industry have varieties of such systems to choose from; one of which is the choice of prepaid payment systems.
Meanwhile, there are factors that determine the method of import and export payments. For instance, in domestic sales, any chosen mode of payment is usually determined by the level of trust in buyer’s capacity and readiness to pay for the goods or services. This approach is rather risky in business as there is no surety or a guarantee that the buyer will honor the agreement.
However, for sales within any given country, the scenario is rather different since payments are usually made through open accounts. Now for export, the same method apply though with a unique approach.
It is true that export and import transactions involve huge amounts of cash in most cases and that’s why traders in these sectors, use payment methods that are effective and convenient to businesses with such high magnitude. However, there are circumstances where the trade involves goods of low-value and there arises a need to have a less complicated mode for an easier payment system.
There are those exporters of consumer goods and other products whose value is generally low. Occasionally, those products are exchanged directly without undergoing a lot of financial processes. As a result, most of export and import dealers opt to use credit cards to pay these export sales.
A study conducted by MasterCard and Global Export Networks on close to 200 small and midsize companies within the Caribbean countries indicated that the number of people who are using prepaid services especially the MasterCard and Credit Cards to transact international business has risen significantly. The report further indicates that close to 54% of the responses believe that international transfers are the means of payment used by most export and import companies.
Meanwhile, the report had realized that there had been a significant impact and subsequent benefit to small and midsize enterprises in the export business in making their international payments by credit cards rather than by paying through international transfers.
Prepaid services are viewed to be the fastest way to pay and collect international operations as compared to other payment systems such as Open Account which require the buyer to be well established and has demonstrated long favorable payment records.
The convenience is further increased by the possibility of import and export traders to place credit card transactions by the phone or fax; however, in such instances, merchants are advised to take serious precautions as there is the possibility of fraud.