Before I move any further in my business plan, I need to figure out a safe payment method to offer my clients.

When buying internationally are there better forms of safe payment than domestic forms? How do Western Union and Money Grams work? Am I protected if I use them?

What about credit cards? PayPal and IBAN? What’s the safest form of payment out there that most people will feel comfortable using in the wholesale business?

A few of the methods you mentioned are considered safe methods of payment; however, there are others that are less safe, and others that are used for scams more than they’re used for actual business.

PayPal

There is some contention over PayPal because, while it is intended to be a secure form of payment, it’s not as good as it was once made out to be. However, a lot of companies take PayPal, especially for smaller orders, but if you want to do business on an absolute global scale, PayPal will only handle payments from the US, Canada, Western Europe, and a few countries in Asia. Asian countries don’t really use PayPal very often, and you can forget about reaching a Eastern European or North African audience.

There are also other cons to PayPal, namely their ToS. Even if you’re completely verified, PayPal can still freeze your account at any time and ask for even more information to verify who you are. You can read their ToS here: https://www.paypal.com/cgi-bin/webscr?cmd=p/gen/terms-outside

Credit Cards

Since you’re a wholesale business, you really shouldn’t use this form of payment unless you trust your buyer and your buyer trusts you. Mostly this option is for retailers. If you do want to use this feature, though, just make sure you allow for secure transactions by implementing VerifiedByVisa and MasterCard SecureCode, which eliminate the risk of fraud (if you follow the guidelines) and reduce your merchant charges. Talk to your web developer about adding this security feature to your website.

IBAN

International Bank Account Number (IBAN) is generally referred to now as TT (or Telegraphic Transfer/Wire). TT is usually only used with suppliers that a customer knows and trusts, as the method is irreversible once the funds reach the seller’s account. Once the amount clears, the recipient can clear out the funds and close the account. However, TT is a fairly standard practice for international transactions.

An advantage of using TT is that, depending on the bank, the transaction cost can be pretty reasonable. Trust is a big factor here, though, so you might want to offer a separate method of payment for first time buyers.

Money Gram and Western Union

Don’t even flirt with using this form of payment. Both of these payment methods are virtually untraceable, and both are used by scammers. If a well-informed buyer sees either of these options on your site, there’s a high chance that they might turn around and leave immediately without giving you a chance.

That said, here are a few characteristics of safe methods of payment:

• The safest methods of payment online or across borders are those that offer fraud protection to its fullest by having the transaction reversed or means to file a claim.
• Fraud protection should exist for both the buyer and seller.
• Safe methods hide personal and financial information about the buyer and seller (and often hide it from each other).
• Safe transactions can be traced or allow refunds when a dispute is filed.

You could always use an escrow service if you want a payment method that safe for both of you.

I’ve used Escrow.com before, and I currently use JP Morgan’s escrow services. With escrow, you have 2 options:

1. The escrow service can receive and hold the funds and then release them once the goods are received.
2. The escrow service can collect the payment and goods simultaneously and once both are received, release the payment to the seller and the goods to the buyer.

If the transaction fails for any reason, the money is returned to the buyer and/or the goods are returned to the seller. The process includes fraud protection, but the system is designed for expensive products and can be costly for lower priced items. It can also take up to eight weeks to complete the process.

Paypal; Letter of Credit. These two are good methods for start and big amount business.