30% of US Firms Say Payments Delays Are Major Cross-Border Frictions

Among U.S. businesses that engage in cross-border trade, the most common pain point is the long period of completion.

Thirty percent of these businesses say that’s a cross-border payments friction they face, according to “Innovating Cross-Border Payments,” a PYMNTS and Visa collaboration that draws from a survey of 456 decision-makers from businesses across 22 industries.

Get the report: What US and UK Businesses Need to Know

U.S. businesses rank the long period of completion No. 1 among their payment decision-makers’ “big five” cross-border pain points, with the other four being payment fraud, data security, knowledge of foreign exchange (FX) rates and fees, and knowledge of transaction and settlement.

Among U.K. businesses, on the other hand, long period of completion is the least of their worries, as they rank it No. 5. Topping their list of cross-border pain points is payment fraud, cited by 33% of these firms, with data security close behind and cited by 32%.

Expressing Trepidation About Cross-Border Payments Frictions

The demand for solutions to simplify complicated cross-border payments for companies seeking to do business in global trade was highlighted by the January announcement that global FinTech-as-a-Service company Rapyd finalized its acquisition deal for cross-border trade enabling platform Neat.

Read more: Rapyd Acquires Neat to Advance Cross-Border Trade

Businesses in the U.S. and the U.K. report theft of both funds and payment credentials — although two very different challenges — as key concerns when making and receiving cross-border payments. U.S. businesses rank these concerns second and third among the “big five” cross-border pain points.

A lack of transparency into the payments experience can also exacerbate cross-border frictions for businesses in both countries, leading to uncertainty for payment decision-makers who, absent that visibility, are unable to accurately forecast their cash positions. Correspondent banking fees and FX fluctuations can also contribute to this lack of clarity.

Generally speaking, U.S. businesses express more trepidation about most types of cross-border payments frictions than their counterparts in the U.K., with the exception of payments theft and fraud.

Optimizing the Cross-Border Opportunity

For those who can overcome these frictions, there’s a great opportunity. More than $120 trillion in payments volume flows each year between business trading partners, and $10 trillion of that volume is cross-border trade. The opportunity for businesses to look beyond their own domestic markets for new trading partners is vast but not without challenges.

Many of the frictions that trading partners face when making and receiving payments from other businesses in their local markets are amplified when doing business on a global stage. Paper-based workflows, delays in receiving payments, matching payments to remittance data, fraud and a lack of faster payments alternatives for payors and receivers are just some examples.

Payors recognize the importance of paying suppliers faster and are investing in real-time payments and digital wallets to close that payables gap and expand receiver account endpoints. Suppliers also recognize that part of accelerating payments is embracing digital invoicing tools and payments enabling those invoices, and they are making investments in both.

Payment decision-makers also recognize they cannot go it alone; only with help from partners can they streamline business payment workflows and optimize the cross-border opportunity that, according to PYMNTS’ research, already drives more than a quarter of their sales on average.