In the last two decades, advances in technology and the digitalization of banking, retail and international online payments have made a significant impact on the state of cross-border trade. In addition, says cross-border payments company Currency Cloud, they have set the stage for the entrance of new and vital tier players. It’s possible, they say, to build as much as triple the flow of commerce worldwide in the next ten years. And, all that is needed to do that is to enable small businesses to do business cross border without friction. They will prosper, and so will the GDPs of the countries in which they operate and trade. In a new whitepaper (found here), Currency Cloud examines how even the smallest online businesses can successfully weave into the framework of international trade – and go “micromultinational.”
OVERCOMING HURDLES AND HOLDUPS
Today, even the smallest of online businesses or sole trader has the chance to become part of the fabric of international trade. They can sell their products via online platforms, and exchange funds and ideas like the bigger, better known multinational players.
But despite the increasing interconnectedness of the global payments landscape, the payments solutions industry struggles to keep pace with global flows, according to the whitepaper. This problem roots back to the worldwide financial crisis from 2007-2012, and the post-recession slow period.
While payments businesses covering the individual, retail and B2B levels are now generally recovering, says Currency Cloud, payment solutions providers are facing challenges in providing quick and efficient solutions at a competitive price.
THE ISSUE OF STANDARDIZATION VS. CUSTOMIZATION
A key issue that continues to negatively affect traditional international payments is uncertainty when it comes IT architecture. In both developed and developing markets, e-banking and mobile banking have become popular. This means that customers are used to being able to interact with their bank and their funds whenever and wherever they like. Now, these customers “expect access to these services with a greater degree of customization than ever before.”
At the same time, while increased customization could serve to boost customer satisfaction, but then there are also benefits tied to standardization. Using a single platform for payments rather than multiple local ones often makes for better functionality and profitability, says Currency Cloud.
International business customers, whether they are making high or low-value transactions, ultimately “want to have both a low price, but perhaps as important, a transparent price,” said Michael Laven, CEO of Currency Cloud, in a recent interview with PYMNTS.
API ACCESSIBILITY & THE “FINANCIAL LEGO” APPROACH
Successful incumbent players, leading banks, in the traditional payments space can make use of financial technology companies like Currency Cloud, aiming to construct broader, more reliable payments platforms. These would shorten the delay between sending a payment and the agreed fee being received.
The use of APIs have allowed these players to optimize the segment of the financial value chain they seek help with, whether it be international transfers, payments processing, etc. In using these APIs, banks and established firms don’t have to remodel their entire existing infrastructure.
According to Laven, this is called the “financial lego” approach, allowing players to plaster together “the best bricks” to support the entire structure. There is therefore no need for them to develop and build required costly technology from scratch.
CLOSING THE GAP
One thing seems clear: For much of the world’s businesses, there still remains a very real disconnect between the speed of a given trade and the processing of its payment.
To get Currency Cloud’s perspective on how to overcome these challenges, download the whitepaper below.