Why Some Firms Don’t Know — And Don’t Care — About Payments Alternatives

Traditional bank transfers remain, by and large, the most common way businesses pay each other internationally, according to the latest research from global payments firm Saxo Payments. But with electronic cross-border payments slated to see a significant uptick in frequency this decade, legacy bank transfers just won’t do when it comes to modern B2B payments.

That’s according to a new whitepaper from Saxo Payments, which released research this week uncovering how businesses are dissatisfied with the status quo of their global payments.

Nearly two-thirds of the businesses surveyed across the globe said they are not happy with the time it takes for their banks to complete a global payment for them.

And while a third of respondents said they had looked at alternative payment service providers to explore whether they could get a better deal, nearly 29 percent admitted that they hadn’t shopped around at all, whether within their existing bank, among rival banks or through alternative FinServ players, to see if someone else could service their payments needs more adequately.

A lack of time and resources, Saxo found, account for the inability for businesses to find a better service provider.

“It seems that companies are too embroiled in day-to-day tasks, and this is making it hard for them to see — or make the time to find out about — the bigger picture and realize they could get a better payments service themselves,” suggested Saxo CEOs Anders la Cour and Laust Bertelsen in their introduction to the paper.

But researchers also concluded that many businesses feel they are already getting the best possible service from their banks when it comes to global payments.

More than one-third believed they are offered a competitive FX rate from their current service provider, and a similar portion of respondents admitted they hadn’t shopped around to see if they could find a better rate on cross-border payments fees.

A slight majority said they’re already satisfied with the rates they’re getting.

Saxo pointed to low expectations in the international payments space as the culprit behind these numbers — among payers and among the payment service providers using legacy infrastructure.

“Whilst local payments can occur instantly, or at least next day, the research has revealed that acquirers generally expect a cross-border payment to take between two and three days to arrive in the recipient’s account,” the paper concluded.

Credit card issuers, too, are frustrated with cross-border payments. Though, for them, Saxo found, the issue isn’t in the time it takes to complete a transaction — it’s in the cost.

One-third of card issuers surveyed said they pay at least a 3 percent fee for a cross-border payment, something Saxo deemed “obstructively high” considering the volume and value of these payments and the fees they then have to pass on to their own customers.

The same percentage of card issuers said they were unaware of what their banks are actually charging them for cross-border transactions.

What can be deduced from all of this data? For Saxo Payments, it’s clear:

“Time poor, resource poor equals inefficient cross-border payments,” the paper concluded.

If the cross-border payments ecosystem is to improve, card issuers, banks, FinServ players and payers all have to explore how to do business better. While B2C payments are driven by consumer demand, B2B payments are less prone to the pressures of changing business priorities, which can evolve more slowly than those of consumers, Saxo suggested.

“With international trade increasing rapidly, payments processes need to keep up to ensure they do not hold businesses back from their full potential,” stated la Cour in an announcement of the whitepaper. “Traditional cross-border bank transfers are no longer the only solution, but we wanted to know if companies are aware of the alternatives or simply sleepwalking through the process, paying high fees for poor foreign exchange rates and slow transfers.”

Unfortunately, Saxo’s research found the disappointing answers to these questions; education, it seems, will be key if cross-border B2B payments are to accelerate.

Just 27 percent of those surveyed said they are aware of new market entrants looking to disrupt and improve the global payments industry, researchers found.

“Too many businesses are continuing to sleepwalk through high fees, poor FX rates and slow transfer times for their cross-border payments,” the whitepaper stated, “simply because it is what they have come to accept as the norm, and they don’t have time to look around and see what better options are now available.”