The progression of payments technology has enabled businesses and customers to make payments in ways once previously thought unattainable. A corporate traveler can now use a smartphone to ride in an Uber, and the payment data from that trip linked to a commercial card can now be automatically integrated into a corporate expense management system. An accounts payable team can now see their entire processes automated, from invoice management to payment, meaning suppliers get compensated quickly, digitally and regardless of geographical location.
But there are other humbling viewpoints of the evolution of corporate payments. While some major corporations and regulators in developed markets like the U.S. and U.K. are harrowing in on same-day and near-instantaneous electronic payments, in developing nations, businesses just want to trust that a payment will land where and when it's supposed to – it doesn't have to be instant.
That's according to the global head of the payments division at INTL FCStone, Carsten Hils, who recently spoke with PYMNTS about the ways in which facilitating cross-border commercial payments differ between developed and developing nations.
It's an insight that stems from the firm's initial focus in moving payments internationally for charities and disaster relief operations, he said.
These are the types of international payments that need to land in a country in both local currency and others, like the U.S. dollar, in order for companies to purchase disaster relief equipment or the like, Hils explained.
There are other key differentiators in this type of global payments service, the executive said.
"Something like knowing when banks are closed when there's political turmoil, and you can't get money in and out of a bank or the payment system," he said. "Or in a country where electricity doesn't work sometimes, and therefore the payments and bank networks don't work."
INTL FCStone has since expanded its target base for international payments, but, as Hils noted, keeping in mind the local challenges of each market remains critical today.
One of the biggest ways it impacts his thinking is in pondering the role of faster and, eventually, instant payments in the world.
"In the U.S., in the first world, it's not an issue," Hils said of providing faster payments. "But the payments system in Haiti or Honduras can't handle instantaneous payments."
With so many systems having to communicate with each other just to get a cross-border payment complete, Hils said that a wait period of just a few days for a global payment that involves a country with a payment system less sophisticated than those in the EU or U.S. is pretty impressive.
"The issue is that you have lots of systems that work together to make the payment," he explained. "You have someone paying into the system, taking dollars out of the system, and every system in every country is different. We're proud to achieve this within one-to-two days."
For the customers actually making and receiving the payment, that time frame is acceptable as well. "Our clients are comfortable that it takes a day for them to get their money," Hils said, adding that there isn't much demand from the firm's clients to accelerate payment speeds.
That's because, in many cases involved these types of markets, it's not speed that's important. What matters most is that payments are secure, and that the timetable for a payment to be complete is transparent.
"[Businesses] are more concerned about security," Hils stated. "They usually have a good handle on when the money needs to be there, and they can logistically plan for that. They won't want to take speed over security."
The complexities and multitude of processes that go into an international B2B payment, he said, mean instant corporate transactions are hardly expected.
From getting an invoice sent to a buyer, to processing that invoice and establishing payment terms, payments between buyer and supplier don't need to be instant. They need to fit within a company's cash flow predictions. It means that if a company needs a payment to land in an account on the 15th of the month, it is critical that it actually happens, Hils said, and that a security breach or other threat doesn't compromise that timescale.
Considering everything that goes on to complete a supplier payment across borders in developing countries, Hils added, corporates understand the necessity of the one-to-two day process.
"I don't think the company minds," he said. "I don't think anyone wants to compromise security."
Looking ahead, the executive added, payment service providers like INTL FCStone will be wise to acknowledge these unique challenges not only of B2B payments, but of corporate payments in markets without top-line financial infrastructure.
With ongoing discussion of faster payments initiatives, it can be difficult to remember that a frictionless global payments solution needs to take into account requisites of other markets, from prioritizing security over speed, or handling less-than-modern infrastructure.