Cross Border Payments in the Sports Industry: A Complete Guide
The sports industry has become increasingly international. Sports teams stage events in new markets abroad due to fan interest and revenue opportunities. This trend combines with traditional multi-country sports such as Formula 1 and European football, leading to new levels of reliance on cross border payments. Global growth creates a demand for efficient and low-cost payment channels that sports teams can use for international competition.
What Are Cross Border Payments?
A cross border payment occurs when a business fulfills its obligations in a foreign country for a service or product, using an agreed currency and amount. The majority of cross border payments are business to business, but many also include individuals sending and receiving currency. The main point is that these payments have to be accurate, legal and verifiable for both sender and receiver in their respective countries.
How Cross Border Payments Affect the Sports Industry
Cross border payments are essential in the sports industry when teams compete internationally. Otherwise, there would be no way to ship equipment, pay for venue expenses, and fund team travel. In essence, cross border payments support the logistics of international competition to provide seamless participation in multiple countries.
Benefits of Cross Border Payments
There are benefits for sports teams to have the ability to make efficient cross border payments, including:
Pre-payment for event-related expenses. Many expenses for sporting events need to be paid ahead of time to secure vendor commitment. Cross border payments ensure that services are confirmed and in place before the event.
Sending equipment to the event location. Shipping equipment can be a major cost in some sports, and is a constant expense. Sports teams need to set up payment accounts across different countries and in different currencies to make sure equipment arrives on time.
Payment of player salaries who reside abroad. When a sports team has a reliable and secure cross border payment system, they can easily pay player salaries in the designated currency. Having a method for regular, fixed cross border salary payments reduces the accounting burden when paying salaries to players.
Challenges of Cross Border Payments
The challenges of cross border payments stem from the fact that two different businesses in separate countries are involved, using an exchange rate between their two currencies. Primary challenges include:
Knowing the currency exchange rate for the payment. Currency exchange rates change daily, making it difficult to know the overall cost of a cross border payment. To overcome this, a team will need a way to contain the cost of fluctuating rates. Read more about how FX payment solutions help with sports transactions.
Making a secure and quick transaction. International payments can face delays and often require multiple confirmation steps to complete. This is a real challenge for sports teams that have weekly events in different countries where timely payments are needed.
Verifying the payment. Banks are well known for holding funds involved in a transaction, so it can be difficult to know if a payment is received or not. Sports teams need a centralized platform where payment execution is verified immediately for both parties of the transaction.
Key Considerations With Cross Border Payments
There are several issues that have to be considered beyond the mechanics and costs of a cross border payment. The following considerations illustrate the complexity of cross border transactions and the need for a sophisticated provider in the industry:
Taxation Laws
Every country in the world has its own tax reporting system, which includes monitoring cross border payments entering or leaving the jurisdiction. Some of these measures are designed to detect money laundering activities or payments that could be subject to taxation.
While cross border transactions by sports teams are usually simple business payments, some of those could raise a red flag for taxability. This is where an established payment partner is of infinite value, as they know how to navigate tax laws and interact with local authorities to prevent any issues.
Cross Border Regulations
When cross border payments are made they are subject to banking regulations in the respective country, such as the FINRA Travel Rule in the US, which applies to both inbound and outbound transfers. Some regulations are international in scope, where countries agree to impose similar controls on transactions. Most of these rules relate to reporting requirements by each bank involved in the transaction, detailing the sender, recipient, amount, and account details.
When a single payment provider is used, this process is highly automated between banking partners and remains compliant with established reporting rules. Without a centralized solution, certain payments and amounts could be delayed as correspondent banks attempt to meet the requirements without using a coordinated or proven compliance system.
Cybersecurity
As cross border transactions begin to rely on non-banking channels or centralized platforms, a new concern arises over cybersecurity. When a transfer takes place from a traditional bank, security is part of the service and relies on internal data controls. However, when a sports team is looking at a global payment partner and its platform, there should be a thorough assessment of their security apparatus, privacy guarantees, and protection of business and personal data.
How to Save on Cross Border Transactions
There are ways for a sports organization to save on cross border transactions by using a payment partner with an established service model. At a minimum, the provider will offer fee-free transactions, competitive exchange rates, and a system to make recurring payments. A partner should also offer services that include foreign currency borrowing from its platform, and hedging tools to counteract rate fluctuations. By utilizing one experienced cross border payment partner with a presence in all countries, a sports team reduces their costs significantly.
Streamline Your Cross Border Payments
With all the complexity and challenges associated with cross border payments, it's clear that one centralized solution is needed. Premier Sports Network partners with a leading payment provider that offers the full scope of cross border solutions for sports teams. Our partner ensures that your cross border payments are low cost and in full compliance for all types of transactions, using a secure and convenient platform.
Contact us to learn how our partner’s cross border solutions can support your team’s international payments.
