Identifying and solving key aspects of global payments friction via the 2022 Global Payment Survey
Making Cross-border Payments Simpler and Less Costly
In today’s B2B global marketplace, most cross-border payments still occur primarily through banking networks like SWIFT and wire transfers for cross-border payments, there are now more options for B2B cross-border payments than ever.
In today’s B2B global marketplace, most cross-border payments still occur primarily through banking networks. Yet sending payments through these networks can be a costly proposition for anyone that must use banks. Simply put, there are simpler, less costly ways.
Typically, sending money via such a network requires a bank to keep money on deposit in a Nostro account at a correspondent bank in that foreign country. The funds in the account are used to settle the payment, which is directed by a message sent over the SWIFT network. If the bank does not have a Nostro account directly, it must go through correspondent banks. While this works, it is costly and inefficient, often resulting in slow payments.
A far simpler process uses a payments platform that provides multi-currency, digital wallets for both remitter and beneficiary. The remitter simply funds their digital wallet and then sends the money to the beneficiary’s digital wallet – instantly. Beneficiaries can then transfer the payment to their bank via global ACH. Using APIs the embedded payments process can be fully automated so that the payments effectively become ‘direct deposits’ to the beneficiary’s bank account.
Low cost FX is available to either party to move money between currency-specific wallets within a single account. The result is that for 34 currencies both parties can do business in their local currency and payments can be received in more than 200 countries. Beneficiaries may choose to receive their funds in alternative methods including paper checks, Virtual Visa, prepaid debit or digital gift cards.
Using a payments platform with multi-currency, digital wallets not only lowers transaction costs, it also enables customers to streamline their cross-border payment processes, creating even greater cost-savings. Cross-border payments can now be embedded into any payments process using APIs.
Monitoring for KYC and AML compliance is built-in, ensuring users comply with regulatory requirements. And it provides tax reporting data for beneficiaries globally including 1099-Ks for US recipients creating yet another significant cost-saving.
So, while traditional banking networks using SWIFT and wire transfers may still be heavily used for cross-border payments, there are now more options for B2B cross-border payments than ever. Software and service providers are moving quickly to accelerate the transition by embedding payment services into their offerings, creating new revenue streams in the process. Ultimately that means that companies expanding their markets and their supply network overseas and looking to bypass their banks will have new options moving forward.
Let us know how we can help with your transition.