The cross-border payments space presents a whole host of challenges for FinTech innovators to try to solve, with new solutions targeting everything from global eCommerce to international tuition payments. The October 2017 X-Border Receivables Report, released last week, outlines just how vast the cross-border payments market is today.
One area of global payments that’s garnered attention in just the last few weeks is B2B payments. Amazon Business, for instance, announced its launch in India to support global procurement needs for small businesses. Insite Software also recently rolled out a white label app to facilitate B2B eCommerce across borders, while B2B payments company Veem announced an integration with Xero’s SMB accounting platform to streamline cross-border supplier payments.
According to the X-Border Receivables Report, investors are flocking to the global B2B payments sphere as international trade is prompting the rise of new players to facilitate the movement of funds between trading partners. Overall, the global payments market could hit $2.2 trillion by the end of the decade; that presents a significant opportunity in corporate payments, according to analysts.
Electronic invoice presentment and payment companies, better known as EIPP firms, are taking center stage as facilitators of global trade and supporters of corporates’ movement away from manual and paper-based cross-border payment processes. Not only can these companies help businesses streamline international transactions, but they can also provide the solutions those businesses – particularly SMBs – need to make the leap into international trade in the first place.
Research from UPS Capital and Payoneer released in August found that 75 percent of small businesses surveyed pointed to the fear of non-payment as their top reason for not going after an international business opportunity.
“Small businesses are very hesitant [to trade internationally],” UPS Capital’s vice president of marketing, Dave Zamsky, told PYMNTS soon after the research was published. “One of the biggest barriers for SMBs is they are very concerned about payment – or, a better way of saying it would be non-payment.”
With this in mind, a slew of FinTechs have surfaced in an effort to quell those fears and help businesses gain the confidence (and technology) they need to conduct international payments. B2B payments, according to management consultant company McKinsey & Co., are driving an estimated 80 percent of total cross-border payment revenues today. While banks hold about 90 percent of those revenues, researchers noted, there are signs that FinTech players are ready to grab their share of the pie.
Investment in cross-border B2B payments startups, the X-Border Receivables Report highlighted, suggests strong interest in this space. According to the latest Currencycloud Payments Innovation Jury Report, more than half of surveyed executives see the highest profit potential in the B2B payments and financial services market. And while research is limited regarding exactly how much B2B payments companies have raised, some estimates position the total B2B FinTech investment at $250 billion.
“Because business payments are often mired in complexity – including regulations related to payroll, receivables or outstanding loans – these intricacies can make payment data more difficult to navigate than data in the person-to-person (P2P) market,” the X-Border Receivables Report concluded. “And, it’s likely that businesses offering services to help simplify the complexities of the B2B market could make these payment service companies a worthwhile investment.”
That goes for FinTechs addressing both the sending and receiving of cross-border B2B payments.
As innovators move to tackle these points of friction – and as investors move to support their efforts – businesses have turned to innovations like APIs and blockchain to make progress.
Larger names in the payments and FinTech space are fueling this trend, too. Visa, for example, has begun offering blockchain-based B2B payments solutions, while Citi has heightened its focus on APIs to enhance corporate treasury and payments capabilities.
“As more businesses seek to step onto the global stage and look for ways to ensure their payments are received, the B2B market stands to grow in value,” the PYMNTS.com X-Border Receivables Report notes.
Click here to read the full report, which includes more insight into cross-border B2B payments, plus a look at the growing market of global tuition payments and a discussion with RE/MAX about the reasons why the U.S. housing market is increasingly attractive to overseas investors.