Cross-Border Payments

[geh82]

Hi all, season's greetings. I will appreciate if someone could help me out. I wish to start a business that entails me buying from neighnouring countries and marketing the product/service in SA. Payments need to be instant meaning i have the option of using credit cards or moneygram or mukuru etc for payments. The sums will be hugh, so I am wondering is it legal to do this out of the banks. I mean not transacting through the banks?

For instance I can place order like 3 to 4 times a week, each order being like R100,000. my profit can be like R2000 to R3000 for each order. It could be less if there are other charges involves that i am not yet aware of. What would you advice? Are there taxes to be paid?

Thanks in advanced.

 

[smc]

Generally, to (legally) make a cross border payment from South Africa, it needs to go via a registered Foreign Exchange Intermediary. So a bank or a specialist fx provider. So far as I am aware, Mukuru does not operate in SA. Moneygram does, but operates mostly person to person. Credit card payments on a personal card are possible, but to be legal you would need to keep within the limits of your discretionary allowance.

There would be import duties, VAT, and you would have to pay tax on whatever profits you make.

Most people find it easier/better to use one of the specialist FX providers, or a bank for import related payments. They can do the documentation required to authorize payments against an invoice, etc rather than using your personal fx allowance. Because of the documentation requirements, cross border payments for imports are very seldom done via instant payment mechanisms, unless the values are low.

 

[dunkyd]

Paying anybody 100,000 in a foreign country is a sure scam.

 

[SauRoNZA]

I would advise any business where your margin before other costs is only 3% is not a business worth bothering with.

 

[SauRoNZA]

Paying anybody 100,000 in a foreign country is a sure scam.

Huh? Where do you think most of the products on our shelves come from? They cost millions in payment not just a mere 100k.

What do you think a single shipment of cellphones cost?

 

[Swa]

I would advise any business where your margin before other costs is only 3% is not a business worth bothering with.

Seconded. No way to make a profit on just 2-3% gross margin. Then there's issues such as held up stock, missing items/shipments which insurance is needed for, and replacing faulty products. Losses are going to occur.

 

[Speedster]

Which country are we talking about here? You mention neighbouring countries, if they're part of the CMA (common monetary area) there are special dispensations applicable.

 

[Speedster]

I would advise any business where your margin before other costs is only 3% is not a business worth bothering with.

If that 3% is after the costs OP is aware of it could be worth it, depending on the turnaround time of selling the stock. 3000 per week return on R100k, i.e. R12k per month, is pretty decent

 

[dunkyd]

Huh? Where do you think most of the products on our shelves come from? They cost millions in payment not just a mere 100k.

What do you think a single shipment of cellphones cost?

2000 minus bank charges, vat, transport, packaging, tax = a minus figure............

 

[dunkyd]

Huh? Where do you think most of the products on our shelves come from? They cost millions in payment not just a mere 100k.

What do you think a single shipment of cellphones cost?

Ps......cellphones don't come from neighbouring countries in Africa.

 

[SauRoNZA]

Ps......cellphones don't come from neighbouring countries in Africa.

It was an example.

You said foreign country, not neighbouring country.

We do plenty of trade with neighbouring countries, especially for food stuff.