XTRM Insights and Analysis
The use of digital wallets on a global payments platform as a tool to send/receive and manage funds has emerged a new model for payment processing.
As with nearly everything related to commerce, the pandemic has accelerated a shift to virtual processes for B2B payments as well. Electronic payments, primarily through EFT and wire-transfer, have been a mainstay for decades now. And while those technologies have been there for some time, the business need has, heretofore, never been so urgent.
Meanwhile, the use of digital wallets as a tool to both store funds and send/receive funds has emerged as perhaps a more promising tool in shifting to virtual payments — one that is, at once, untethered to traditional banks and financial institutions’ high fee structures and yet still maintains the security and compliance controls while allowing its users to remain connected to their personal and company bank accounts.
What allows digital wallets this flexibility, of course, is the underlying payments platform that manages the flow of digital payments globally and domestically. The table below, reprinted from an earlier blog post, highlights the key differences between Legacy Processes and an Intelligent Payments Platform serving up digital wallets:
Some of the primary benefits of digital wallets, then, include simplified cross-border payments and, perhaps even more importantly, greater user choice and self-serve tools and a long list of APIs accompanied by account management functionality to enable software and service providers to embed and support a white-labeled payment distribution offering within their solution offering:
Cross-border payments are simpler and less costly. While digital wallets do not need a bank to send or receive funds on the platform, each account is linked to a bank (or banks) as an external transfer point. The digital wallet architecture enables each user to have multiple currency wallets while the platform enables low fee FX exchange on the platform prior to transferring funds externally to the user’s bank account. Providing the user with self-serve tools to manage how they wish to receive payment and manage their bank information on the platform eliminates the need to capture and store sensitive PII and bank information for EFTs and/or wire transfer.
The benefits of user self-serve doesn’t end with simplifying PII. The platform provides multiple entry points for receiving funds from card processing networks, invoice payment, wire transfers and linking to company bank accounts. And payment endpoints include payee choices beyond simply transferring funds to a personal or company bank account such as a virtual or physical debit card or digital gift card, etc. Thus the payments platform offers both greater flexibility for payment distribution for payers and greater user choice for payees.
Finally, embedding digital wallet functionality and digital payment platform capabilities can be readily accomplished using APIs to automate all of the payment functions from wallet creation to wallet-to-wallet and external transfers, etc. Enhanced Manager Account functionality enables ISVs and service providers to embed white label payments capabilities to meet their clients and customers end-to-end payments requirements, while offering their own tier 1/tier 2 support backed by the platform’s APIs and integrated, AI-supported AML/KYC compliance and tax reporting.
If you’d like to learn more about how digital wallets can help simplify your customers’ and partners’ payments download our white paper, Simplifying Money Movement for B2B Payments. Or to see how our platform can solve your customers’ and partners’ payment distribution challenges and start planning for 2021, drop us a line or schedule a demo to see how our solution can positively impact your business future.
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