B2B Payments

Easing FX Woes For Newly-Global SMBs

The pandemic has introduced a major incentive for companies of all sizes to rethink their business models, and perhaps the most profound shift as a result of this trend is the migration of small, mom-and-pop shops to an online commerce model.

It's not a change easily accomplished, but thanks to eCommerce-as-a-Service solutions, launching an online webstore today is easier than ever. Shifting strategies comes with a set of new challenges, however, and payments are among the largest for these small businesses.

That's not only because eCommerce opens up a potential buyer pool to customers outside of one's home market, creating the need for companies to accept payment in different currencies. It also has implications on the B2B side of operations, said Remitr CEO and Co-founder Kanchan Kumar.

Launching online and expanding into the international market can be effective for B2B exporters, too, and introduce the need to expand supply chains across borders. And as consumer and business customers make payments in one currency, a small business may have to also make payments to vendors in another currency, creating a foreign exchange mess that's inefficient and particularly costly.

Remitr recently introduced its global accounts service for small businesses in Canada, a tool that enables small- to medium-sized businesses (SMBs) to hold multiple currencies to send and receive payments. He told PYMNTS about the pain points of traditional wires when SMBs need to move money internationally, and how FinTechs must approach the complex topic of managing money in multiple currencies for small firms that often lack the experience or resources to do so on their own.

Cutting The Wire

The fees associated with international wire transfers are perhaps the biggest point of friction that business owners face when expanding internationally, said Kumar. In B2B payments, this is especially true considering supplier payment values are likely in the thousands, or tens of thousands, of dollars.

But as it turns out, paper checks are a headache for SMBs in Canada almost as much as they are for the B2B payments landscape in the U.S.

In Canada, paper checks account for a declining, but still significant, portion of B2B payments volume in the country, said Kumar. Even worse, the U.S.'s continued use of the paper check means companies that wish to pay a business in Canada may actually mail a check.

"That check takes 21 days to turn into cash here in Canada," Kumar noted. "That's a huge pain point."

Between wire fees and a cash flow bottleneck, sending and accepting payments from across borders can take a significant hit on SMBs' bottom lines.

A Multi-Currency Opportunity

For larger organizations, the solution to these challenges would be to open up a bank account in each jurisdiction in which business is done in order to have access to an account in that market's currency. That entails incorporating within that market, however, an expensive, lengthy and complicated process for an SMB.

Remitr's solution to this challenge is to facilitate the opening of accounts for theses SMBs, which are now able to open an account in U.S. dollars, euros or Britain pounds. Users can send and receive funds from and to these Remitr accounts, and then sweep that cash into their home bank account in their local currency if and when they choose.

This strategy isn't without its own challenges, particularly the added complexity of holding funds in multiple areas, which can limit visibility into exact cash positions for some companies. Kumar noted that Remitr elevates transparency by providing a unified dashboard of all funds held within Remitr accounts across currencies, but there is another element to easing the friction of managing global payment inflows and outflows: education.

"If you're a small business owner and you've never had to deal with something like this, it's new," he said. "It's about learning, and we're trying to cut short the learning process by improving time to market.

"It's not just about technology," he continued," but also how you help a company grow and deal with challenges — and ultimately come out stronger."

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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