B2B Payments

Forging A New Path For Money Movement In Europe


International payments for SMEs are especially expensive, with business owners often unaware of how much a payment will actually cost them.

Recent research on the topic churned controversy when it concluded that banks are actually spiking the already pricey process of sending money across borders for smaller businesses. Last month, analysis from Money Mover found that U.K. SMEs spend nearly $5.8 billion in hidden fees every year — and that’s only for cross-border payments made within the Eurozone.

The European Union is taking measures to ease the friction of pan-EU corporate payments, most notably, through the Single Euro Payments Area initiative. But, with so many currencies at play in the region, cross-border payments are bound to get complicated — and expensive.

“In Europe, only part of the transaction takes place in euro,” Michał Czekalski, CEO of Valuto, recently told PYMNTS about SME spending.

Valuto was launched earlier this month by Poland-based Currency One, an international payments firm. The site was designed specifically for pan-EU corporate payments and targeted the pain points of this process that emerge when interbank money movement racks up the tab.

“SMEs suffer mainly from high bank fees for international transfers and unfavorable exchange rates,” Czekalski explained, adding that the commission each bank takes at each stop along a payment’s journey throughout the EU means a higher bill for the sender.

“Therefore, the traditional international transfer, due to the time and number of intermediaries, takes a long time, is expensive and not very transparent,” he added.

The launch of Valuto provides a portal for businesses to exchange funds from one currency to another to pay suppliers that don’t work in their own local currency. Valuto establishes its own banking connections throughout Europe, allowing users to have greater insight into the path a payment takes.

Czekalski said the service looks to reduce payment costs for SMEs in several ways: cutting out the fees charged by traditional banks and replacing it with more transparent costs, lower commission rates and eliminating the need for SMEs to maintain multiple bank accounts in various markets.

But, key to the solution, the executive added, is that Valuto is an open API, meaning it integrates into businesses’ existing cloud-based accounting and money management portals.

Doing so, Czekalski said, automates recordkeeping and cash flow management when money is sent or received through Valuto, even if that recordkeeping is done by a third party. It also means that those third parties can integrate Valuto into their own services.

For instance, an eInvoicing provider can add on a collections service to their offering by looping in their billing service with Valuto. An eInvoicing company’s clients can send invoices in local and non-local currencies and collect payments in their own currency; on the flip side, buyers can see their invoice processing service provider receive and pay off those bills when Valuto is integrated into the mix.

But when it comes to global payments, deals aren’t confined by borders, and that includes the borders of the European Union.

At present, Valuto supports nine currencies exchanged within the region and is working on striking new banking relationships to expand that list further. Czekalski said that Valuto is also eyeing some new markets; after all, high bank fees and a lack of transparency in international payments are not confined to just the EU.

Spreading globally signals the universality of these challenges, especially for SMEs that are seeking to finally reach new corporate clients in previously untapped markets.

Czekalski said he sees this as an opportunity for technology to take shape, though groundbreaking innovations, like blockchain, probably won’t take off in consumer or small business payments.

“There are still serious questions about adapting blockchain-driven payments to regulatory requirements and security standards,” he said, “and it will play a major role in defining large corporate networks, such as SWIFT.”

Whether the tool takes off or not, the international commercial payments arena is headed for a makeover, and corporations of all sizes will see the impact, as so-called “banks of the future” and “neobanks” heighten their bonds with business clients. According to Czekalski, he plans to be present when that happens.

“International payments and FC is a rare FinTech space that is truly scalable across the globe,” Czekalski said. “I think that we will observe a few global players that will emerge in the following years, and I am confident that Valuto will be one of them.”



On Tuesday, March 31, 2020 at 9:00 AM (ET) join PYMNTS CEO Karen Webster and panelists Vincent Kilcoyne and Roland Brandli of SmartStream for an in-depth discussion on the need to use transformative digital strategies to remain relevant in today’s challenging financial landscape. The discussion will cover strategies that will allow clients to improve operational control, reduce costs, build new revenue streams, mitigate risk and comply accurately with regulation.