Cross-border Payment Solutions Foster Growth For Banks & B2B
Cross-border Payment Solutions Foster Growth For Banks & B2B
According to a recent study, B2B cross-border payments will increase by 30% in 2022, reaching $35 trillion. Furthermore, according to research, cross-border payments made by SMEs increased sharply year over year, indicating a broader potential increase in cross-border trade payments. In 2020, 43% of SMEs said they did international business, up from 34% in 2019. SMEs represent almost 90% of the businesses worldwide according to a world bank report and provide almost 50% of the employment. And the B2B cross-border payments market size is expected to grow to $2515 billion by the year 2030 from the figure of $1000 billion in 2021.
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To capitalise on this, businesses and banks must first understand the tools and processes that can assist them in excelling in new markets. This article aims to give a walk-through on the process of understanding how cross-border payments work, explaining international online payment processing and the options available, and providing insights on some of the best payment approaches for cross-border business.
Understanding how cross-border payments work
Cross-border payments are an exchange of funds between companies, financial institutions, banks, or people engaged in business B2B, DTC in various parts of the globe, divided by boundaries of nations. Credit card payments, bank transfers, and other payment methods such as digital wallets and location-based alternatives are commonly used for cross-border payments.
What are the types of cross-border payments
The most commonly used terms to categorise cross-border payments are;
Cross-border payment classifications
Cross-border payments are classified into four main transaction categories;
What are the problems faced during cross-border payments
Slow processing time: In comparison to domestic payments, which are processed almost instantly, traditional bank transfers used for cross-border payments typically take one to five business days to process. This is due, once again, to the large number of parties involved in a single transaction. Every single transaction involves numerous intermediary services. Another reason for the slow pace is a lack of automation and standardisation across multiple banking networks and payment infrastructures. Another issue is that multiple countries are involved in a single transfer. For example, an individual or entity attempting to transfer funds from an East European country to a South Asian country may have their funds rerouted through Germany or even Russia, and then through India before arriving at their intended destination. As a result, because there are numerous processes to complete and multiple transaction facilitators involved, cross-border payments may take longer than expected.
What are the problems faced during cross-border payments
Slow processing time: In comparison to domestic payments, which are processed almost instantly, traditional bank transfers used for cross-border payments typically take one to five business days to process. This is due, once again, to the large number of parties involved in a single transaction. Every single transaction involves numerous intermediary services. Another reason for the slow pace is a lack of automation and standardisation across multiple banking networks and payment infrastructures. Another issue is that multiple countries are involved in a single transfer. For example, an individual or entity attempting to transfer funds from an East European country to a South Asian country may have their funds rerouted through Germany or even Russia, and then through India before arriving at their intended destination. As a result, because there are numerous processes to complete and multiple transaction facilitators involved, cross-border payments may take longer than expected.
What are the advancements in cross-border payments technology
There is a pressing requirement to improve cross-border payments and address the problems faced by financial institutions like banks and businesses. A couple of cross-border payment categories that have seen fintech growth are;
How secure are cross-border payments
Security measures for cross-border transactions are improving. Although there is no single set of protocols followed by every country, the measures being taken by the payment enablement systems are as follows;
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Legal Entity Identifier: Identification of the receiver and the sender, is mandatory. This is being developed further and will allow, crucial criteria and data gathering, and it will be simple to confirm a person's identification. An entity that participates in a financial transaction is identified by a reference code known as a Legal Entity Identifier, or LEI.
Benefits of having a configurable cross-border payments solution for your business
Increase your ROI & generate new revenue: With the right cross-border payments solution, your business can retain and monetise from existing customers. You can cross-sell and up-sell other financial products to retail customers, use built-in modules for running promos and loyalty programs and maintain business relations and keep the account of customers moving to other countries. You can also grow a customer base in countries without a physical presence.
Choose a configurable cross-border payments solution for your bank, financial institution or B2B business
The cross-border payments ecosystem is currently undergoing change thanks to several banks with established client bases and fintech companies with adaptable offers and go-to-market strategies. This is a fantastic chance for banks and SMEs to gain market share internationally. If you are a bank, tour operator, destination management firm, or imports and exports organisation searching for more information on the best cross-border payment solutions for your business's revenue growth, get in touch with the fintech specialists right now. Get in touch with a cross-border payment solutions team now!
To acquire the platform, book a demo with the Fable Fintech cross-border platform experts;