Changing B2B Cross-Border Transactions

Banks must stay up with consumer expectations and fintech innovators or risk falling behind.

In the 2017 B2B Payments & Working Capital Management Survey, 45% of respondents said a bank’s B2B payments service is important when choosing a partner. With 20% of survey respondents using alternative B2B cross-border payment solutions, banks’ flexibility to match an enterprise’s development trajectory is crucial for worldwide expansion.

This shows that companies are switching from inefficient and expensive paper checks to electronic payment systems and that banks have failed to fulfill international payments demand for innovation and simplicity.

Meanwhile, corporates face cross-border payment fragmentation and complexity. Choosing the best payment method while meeting changing compliance and regulatory requirements may be difficult.

Saxo Payments’ study of cross-border B2B payments found that 48% of respondents were dissatisfied with foreign payment fees and 80% would explore switching providers to save expenses. Lack of transparency, currency rate fluctuations, and delayed transactions are further issues. This unhappiness has driven the emergence of fintechs, who provide new money management solutions to organizations.

Knowledge gaps, when conventional banks cannot satisfy regulations or advise firms on global payments, may slow growth. This has produced an unproductive and unsustainable environment that drives firms elsewhere.

Paytech businesses are using platforms and AI to develop more efficient solutions. Technology platforms improve value offerings and enable new business models. For instance, automated systems may verify all payment procedures before making a payment.

• TransferMate (Ireland) integrates foreign payment services with accounting and ERP systems. Corporations may transfer funds securely and quickly using 117 currencies, 145 countries, and transparent exchange rates.

Frost & Sullivan’s research predicts real-time payments will expand in the next years. Massive mobile devices and mobile payment uptake will support this worldwide trend.

• Previse (UK), which obtained £2 million in venture investment to build its AI solution, lets customers pay suppliers immediately after receiving an invoice.
• Ripple (USA) uses Blockchain to allow banks and financial organizations to transmit money internationally in real time.

Many sophisticated technology use cases are being studied and will likely be used to boost efficiency and save costs.

The value propositions and business structures of Paytech firms differ greatly. They all aim for a smooth, easy-to-use system. Paytech firms provide integration with current systems, SEPA transfers, FX conversion automation, markets, payment gateways, automated compliance, and alerts.

• Transferra (UK) provides a wide range of financial services for business owners: UK online business account, individual IBAN, international payments, currency exchange, and many more.

Dynamic currency conversion (DCC) and multi-currency pricing (MCP) allow banks and merchants to price products and services in customers’ native currencies and accept payment in those currencies. It streamlines international sales and gives customers a personalized, transparent buying experience.

• Fexco, MonexFS, and Continuum Commerce are Irish fintech businesses reinventing global finance with merchant and ATM network solutions.

Paytech businesses may disrupt the complicated corporate cross-border payment cycle to enhance the consumer experience.

• CurrencyCloud (UK) automates the whole payment lifecycle by removing the need for firms to construct payment infrastructure or negotiate with banks for international payments.

With its API, the cloud-based technology provides seamless worldwide payments and speedy launch. Paytech businesses may save expenses by streamlining processes and becoming online or branchless.

• Flywire (US) due to its simplified system and reduced overhead, the global payment and receivables solution provider can charge roughly 50% lower foreign exchange margins than typical banks.

Cross-border payment ecosystem reinvention

Paytech start-ups’ creative cross-border payment solutions are pushing established players to revamp their offerings in order to stay competitive and satisfy client needs. In order to stay up to date with innovations and improve their services, banks are either investing in or working with Paytechs.

For instance, as part of a strategic alliance, AIB purchased a minority interest in the cross-border B2B payments startup TransferMate, providing business clients with an easy and affordable means of sending or receiving money throughout the world. The largest bank in Europe, ING, has also forged a strategic alliance that will provide its corporate and SME clients access to TransferMate services.

Corporations will profit from cross-border payment trends in the future as they employ more innovative services, such as quick payments, improved FX rates, and technology-based platforms that assist in expediting, decreasing costs, and simplifying procedures.

Paytech will provide greater customer service and agility by reducing expensive mistakes and complexity, even if certain transactions may still need financial organizations involved.