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Hi KC. Malaysia is unfortunately one of the few countries where their banks present a challenge when cashing non-Malaysian checks. We frequently heard from such affiliates about long delays in cashing checks, or excessive processing fees, that banks from other regions do not charge. Some foreign banks won't even try to cash the check and will just return it. Malaysia isn't alone, there are a handful of foreign countries which seem to take advantage of their banking clients.
To try and alleviate these problems, we use a third party service to pay our affiliates. They pay our affiliates with checks from local banks in local funds. (Aussie affiliates in AUD from Australian banks, Canadian affiliates in CDN from Canuk banks, etc) That way, nobody should pay a fee or suffer a delay to cash to our check. Like most financial services/institutions/credit cards, they are required to run the exchange in their favor to cover a fluctuating currency market. Usually the exchange difference is negligible, but it is higher for some countries, Malaysia being one of them, and is near the rate of our check processor buys Malaysian Ringgits at.
I'd like to make clear that this isn't us padding margins, we're not keeping the exchange difference, it actually costs us significantly more for this service than simply cutting checks ourselves. It's not a perfect fix, but the alternative is worse (delays, fees, return checks). The exchange difference is unfortunately a limitation of using any third party payment service, and is only a problem for a few foreign countries.
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