Crossing Borders Beyond Payment Processing

AFEX’s recent move into Madrid spotlights growing demand among businesses for services that go beyond mere payments processing. The payments and risk management firm gives PYMNTS the details.

The growth in cross-border payments has a rather greenfield opportunity when it comes to displacing traditional bank transfers, especially with B2B payments. The fact remains, as noted by a recent survey by Saxo Payments, that firms are, by and large, not happy with the length of time it takes to get paid (and pay).

To that end, AFEX, one of the largest nonbank providers of payment and risk management platforms on a global basis, last month said that it had opened a new office in Madrid.

The company said at the time that the goal was (and, of course, remains) t0 serve Spain-based businesses that have and want to grow their international exposure.

And there’s cross-pollination afoot, too, as AFEX’s services extend toward those firms looking to make inroads into Spain and beyond. In an interview with PYMNTS, AFEX EMEA Sales Director Tony Rea said that the move into Madrid, only a few weeks old, was spurred in part by “existing clients in London and their partners” making the shift beyond the U.K. to the Continent.

The key issues with any movement to new markets, especially when establishing cross-border relationships, said Rea, include “an understanding of the regulatory requirements and the fundamental challenges of communication that come with a new country, such as language.”

For SMEs that have been making the leap into Spain, or are planning to make that leap, the issues that confront different industries — for example, if they are firms that are involved in the export or import of goods, perhaps operating within food or beverage verticals, or are more service-oriented (such as law firms) — can be complex enough that they are not necessarily well-served by traditional relationships that may be in place with banks.

Certainly, the market has appeal, as AFEX has noted that the export market in Spain alone has been growing by nearly 5 percent, as measured by 2015 over 2014, with a total value of €250.2 billion. That means that the growth in trade also carries with it attendant focus on treasury management services, FX and risk control and, of course, international payments services.

It is in risk management that AFEX has been differentiating itself, with continued value add in the fact that firms venturing into new markets need expertise. Services such as these, said Rea, show the folly in the “misconception is that we are in the broker business … when the truth is that we are indeed specialists who know their markets,” with knowledge that expands beyond commercial, political and regulatory arenas. “It’s a bigger world and more open,” said Rea, “but there’s also more volatility, which means that [firms] need partners as they grow.”