How to choose a payment agent: what to check before the first payment

There are many payment agents, and from the outside they look alike: the same promises, similar percentages on their websites. The difference shows in the agreement, in the report and in the final amount debited. Below are the questions worth asking before the first payment.

Types of agents

A Russian agent is a company in Russia. You pay it roubles within the country, and the money goes abroad from its foreign companies or through its partners. For you, this is a rouble payment to a resident, but the contract with the supplier remains yours, and currency control on that contract does not go away.

A foreign agent is a company abroad. An agreement with it is in itself a contract with a non-resident. A payment to it is already a currency transaction, with its own documents for the bank.

The “bank payment agent” from the Law on the National Payment System has nothing to do with paying for imports. That is the term for organizations a bank engages, for example, to accept cash. “International payment agent” is not a legal status but a name from advertising. What matters is something else: who will appear as the payer at the supplier’s bank.

Checking the company itself

No licenses are issued for agency payments for imports. So an agent is checked like any counterparty. An extract from the Unified State Register of Legal Entities (EGRUL): registration date, changes of director and founders, address. Financial statements: whether the turnover is in line with your payments. The arbitrazh (commercial) court case database: disputes with clients over money not returned. Enforcement proceedings.

A clean extract does not prove reliability. But problems in it are a good way to screen out unsuitable agents.

The agreement: five points to look for

• In whose name the agent pays the supplier, and who will be shown as the payer.
• The execution term for a payment order. Not “within a reasonable time” but a specific term.
• What happens to the money if the payment is not executed: how soon it is returned and at what rate, if a conversion has already taken place.
• Sub-agent: only with your consent.
• The report: which documents you will receive and by when.

If an agent is not ready to show the agreement before the first payment, that answers the question of choice. More about the document: agency agreement.

The all-in rate, not the percentage on the website

The fee percentage is only part of the price. The total is made up of several layers:

• the agent’s fee;
• the FX markup: the difference between the rate in the payment order and the market rate on the same date;
• intermediary bank charges and who bears them: you, the supplier, or both, shared between you;
• fixed charges per payment, if any;
• the cost of a return if the payment does not go through.

Count one number: how many roubles left your account per unit of foreign currency the supplier received. This is the only way to compare two agents with different fees and different rates. A low percentage with an inflated rate often costs more. If you already have a rate, you can check it on the “Compare your rate” page.

Who actually sends the money

This question is asked least often, although whether the payment arrives depends on it. The supplier’s bank sees not the agent in Russia but a specific paying company and its bank. Some banks accept payments only from certain payers or from certain countries.

Ask in advance which company, and from which country, will send the payment. And what happens if the agent decides to pass the payment to a partner. The right answer: only with your consent, and the agent remains liable to you. Also check that the contract with the supplier allows payment by a third party.

The report and documents

Ask for a sample report before you start. It should show the rouble amount, the rate, the fee, the foreign currency amount, the date and the document confirming the payment. A completion certificate is attached to the report. More: the agent’s report and completion certificate.

Without a report, it is hard to close the payment at the bank where the contract is registered and to support the expense in your accounts. Saving on documents later costs more than the difference in the rate.

A single agent or a broker with a pool

Choosing a single agent means choosing one set of routes. While the route works, all is well. If a bank in the supplier’s country stops accepting payments through that channel, the payment waits, and there is nothing to compare the terms with. You will have to find a second agent yourself: a new agreement, a new check, a new report.

An international settlements broker works differently. It maintains a pool of agents that have already been vetted and have signed terms. For each payment, it selects an agent whose route to the required country works right now, and compares the terms. Before the roubles are debited, the execution term is set in the agency agreement, and the rate and fee in the payment order. Documents from all agents in the pool follow the same procedure.

A broker should be checked with the same questions: which agent will execute the payment, what the agency agreement says, what the report looks like.

VEDmost works as a broker. Our fee is paid by the executing agent; you don’t pay us separately. Tell us your current rate, and we’ll look for a lower rate in our pool; if we can’t find one, we’ll say so. The three ways of paying are compared on the “Broker, agent or bank” page.