Although a new study from Wise, a company that makes it easier to move money across borders, reveals that 34% of U.S. SMBs are currently operating internationally, broken payments and banking technology are a barrier to their international ambitions.
According to the study, the most common reasons SMBs want to start or expand internationally are to:
- Reach new customers (55%)
- Improve long-term growth prospects (33%)
- Source new suppliers/resources (24%)
However, while these SMBs see “significant opportunities” in expanding globally, 49% have felt discouraged or prevented from doing so due to the cost and complexity of international payments (45%), cultural barriers (30%), supply chain and logistics (29%), and lack of capital/resources (27%).
Even SMBs currently operating internationally face international banking challenges. Most (79%) say it’s harder to operate abroad today compared to five years ago, primarily due to international banking (40%), including managing multiple currencies, bank accounts, and costs. Plus, only 47% of these companies found it easy to understand the cost of sending money abroad, and just 12% could correctly identify the costs involved in cross-border payments.
The COVID-19 pandemic has impacted SMBs’ expansion plans, including:
- Delaying or canceling their plans—46%
- Making it more challenging to attract new customers—32%
Technology has come to the rescue, with 75% of these SMBs saying technology, especially digital tools, has helped their businesses by enabling them to offer new products and services (31%) and reach new customers (24%).
Most (70%) of these SMBs rely on bank transfers or card payments when sending or receiving international payments. But, says Lindsey Grossman, director of product, North America at Wise, “Making international payments fast, simple, and transparent will go a long way toward helping small businesses fully reach their business goals.”