B2B Payments

Adding Modern Spark To Global Wire Payments

After the advent of online shopping, the next big thing to excite consumers was tracking capabilities. The ability to track a package from point A to point B — and see all of its stops in between — provides a layer of transparency for individuals.

Cross-border payments rarely offer this kind of transparency, however, especially when payments are done via the wire.

Wire payments are considered clunky, slow, opaque and expensive — not to mention outdated by many, with roots dating back to the 1870s. It’s led many FinTech players operating in the payments space to turn to other payment rails and bypass these points of friction, especially for consumers.

For B2B payments, however, that may not be the best plan of attack, according to Wayerz CMO Igal Chemerinski.

“There are a lot of FinTech players out there coming out, and many of the players are trying to circumvent the banking network and develop out-of-bank solutions,” Chemerinski said in a recent interview with PYMNTS. “This is great, obviously, but when a corporate customer like, say, Coca-Cola is sending money to Tokyo, they use the bank.”

Corporates with cross-border payment needs simply won’t turn to anyone else, at least not yet, the executive explained. These clients use banking services, pay their clients through the banks and depend on banks’ regulated operations to maintain trust. A million-dollar payment isn’t going to be entrusted to a mobile wallet, he said.

Yes, these FinTech innovators are beginning to take pieces of the payments market away from traditional financial institutions, especially for micropayments, but the vast majority of payments are made via banks and via the wire, Chemerinski said.

With this understanding, Wayerz develops solutions to make corporate and interbank payments and transfers more transparent and streamlined. The latest rollout in this initiative is the recent launch of the Global Payments Network (GPN), a platform that allows banks and corporates to track their international wire payments.

“When you look at the entire network, banks are transferring money between one hand and another, and there is no tracking,” Chemerinski said. The GPN changes that. “Just in the same way you are sending a FedEx package, you are seeing where, exactly, it is, when it will arrive, its expected delivery — that’s the GPN.”

Tracking a wire payment as it bounces from one bank to another across the globe adds some clarity to the process, the executive explained. But there’s more to wire payment tracking than simply taking the guesswork out of when a payment will arrive to its intended destination.

Key to the GPN solution, Chemerinski explained, is risk mitigation for corporate payers.

The issue with wire transfers is that a cross-border payment does not begin at one bank and go straight to its destination; when a payment is initiated, the bank sends the payment into its interconnected web of banking partnerships — the funds may bounce between multiple banks in multiple countries, tacking on various fees at each stage of the journey.

According to Chemerinski, being able to track a wire payment means gaining more control over that route.

“If you’re sending money across borders, you can send it the cheapest way or the fastest way, or you can avoid specific countries considered high-risk,” he said. “The tracking part of this system will allow the CFO of a large corporation to be able to track the wire, to be able to say, ‘I want to spend a little more money and have it made faster,’ or to spend a little less because it’s not as urgent.”

“Or,” he continued, “they can say, ‘I want to make sure my wire transfer is going out of my local bank and that it does not flow through certain countries or jurisdictions.’”

“The platform is a way of providing an optimization later for speed, for cost, for risk,” he added.

Acknowledging that the wire and banks continue to play a critical role in corporate payments amid massive FinTech disruptions is also a major win for banks.

The Wayerz executive explained that the GPN is part of a broader system of services for financial institutions that allow them to streamline the routing and billing procedures between each other when wire payments are made. When it comes to payments evolution, keeping the bank a part of the process is key, said Chemerinski.

“What [the banks] need is a way to replace the legacy systems so they can stay competitive and more transparent and they can provide services just like other FinTech players,” he said.

He added that the market will need to embrace cooperation if disruption is to be beneficial to the majority and that includes the estimated 90 percent of payments worldwide that Chemerinski said are initiated at a financial institution.

With growing pressure for banks to enhance their services and technologies, the executive said this collaborative approach will take hold, instead of FinTech innovators pushing out the banks completely.

“Obviously, we are setting this platform out to the banks to allow them to be more competitive,” Chemerinski said. “I don’t see banks disappearing as fast as some FinTech companies might think.”


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.