Disparate Businesses Find Common Trade Solutions in Interoperability and Real-Time Payments

b2b, b2b payments, real-time payments

Operations across international borders inherently add layers of complexity and fees to B2B operations.

Yet despite historical speedbumps to global expansion, innovations in real-time payment (RTP) networks and digital-first interoperability solutions are helping businesses of all sizes take the leap into intercontinental commerce.

This, as Brazil and Argentina are reportedly exploring a ‘currency union’ for executing trade payments between the two countries. At the same time, a next generation global RTP network launched in Davos just last week.

While the hot streets of São Paulo and Buenos Aires may have little in common with the affluent Alpine Mountain enclave of Davos, both initiatives underscore a rising tide of interest in interoperable, cross-border payment networks.

After all, establishing a productive ecosystem for international B2B transactions is critically all about bridging borders and establishing commonalities, no matter the miles or the contrasts between them.

All-in-One and One-for-All

Nine in ten small- to medium-sized business (SMB) owners said that all-in-one payment platforms for B2B transactions save time and are more convenient, according to a PYMNTS study.

Inter-market and cross-border interoperability can help address and smooth over the breadth of payment and reconciliation frictions for international engagements that commonly include foreign exchange (FX) mismatches, reconciliation discrepancies from siloed data, payment delays, and round-peg, square-hole operational bottlenecks existing between those businesses transacting across borders with each other.

Big-ticket B2B transactions from abroad often bring with them an additional bevy of bolt-on costs associated with cross-border payments between businesses, including higher transaction fees and intermediary and beneficiary bank charges.

Separately, aging tech infrastructure and outdated software frequently leave businesses vulnerable to their own accounting systems’ pitfalls, lead to ongoing compatibility frictions, and even slow down critical business operations in ways that create relationship-damaging vendor frustrations.

Seamless collaboration among ecosystem partners is critical to successful and repeatable B2B transactions.

PYMNTS research in “The One-Stop Bill Pay Playbook” finds that among the top complaints of B2B transactions are confusing payment interfaces for payors and missing features for payees.

Better Abroad Than at Home

B2B payment interoperability is generally considered a much more attractive feature when transacting internationally. That’s because intra-market interoperability, or domestic payment ecosystems, allow out of network banks and financial institutions to compete for the same business. Additionally, cross-border interoperability better supports transactions paid for and received with currencies that are different from an organization’s domestic fiat.

That is the goal of the Universal Digital Payments Network unveiled at Davos, as well as the proposed digital zonal currency being proposed in Latin America: interoperability between regulated stablecoins or central bank digital currencies (CBDCs).

These digital currencies are designed to translate so-called digital dollar benefits, including hyper-rapid RTP settlement speed and smaller processing fees, to international financial transactions. The use of digital stablecoins is meant to reduce, and ideally completely remove, FX frictions, while simultaneously helping to realize near instantaneous settlement times.

Research in the new PYMNTS and Payoneer report, “International B2B Payments: A Guide for Entrepreneurs and Digital Businesses,” found that more than three in four (77%) SMBs are unhappy with their current cross-border payment solutions and are keen to explore solutions that improves account receivables (AR) processes as they relate to international transactions.

Payment systems interoperability promises to deliver smoother cross-border trade and a more frictionless experience across both sides of the transaction.

Read more: EU Digital Wallets Take On Global Card Networks, Strive for Interoperability

Late payments threaten cash flow for businesses of all shapes, sectors, and sizes — with PYMNTS previously reporting that businesses are holding an estimated $1 trillion in unpaid B2B invoices for their suppliers.

Enabling real-time access to funds is becoming more critical than ever given the present contemporary economic environment, where waiting days for money transfers to clear, or currencies to be exchanged — both common delays in international B2B transactions — can inadvertently slow down a company’s operations and even critically hamstring future growth.

PYMNTS research in the report “Cross-Border Payments For Digital-Native Companies” reveals that lack of access to the financial services that can power their international reach, such as cross-border payments tools, is a key constraint to many businesses global growth.

A lack of appropriate banking infrastructure to manage global transactions can similarly halt revenue growth or cause liquidity management issues.

The ability to monitor global transactions for compliance, fraud and user experience risk is also critical for companies seeking to sustain cross-border business growth.

Innovation has always been a future-first way to manage the complexity of undertaking international growth, and interoperable, RTP networks offer compelling solutions to a growing list of pressing challenges and can help make sure that the risks of doing business across borders doesn’t diminish the financial benefits of expansion.