From a payments perspective, the world gets smaller each day, as borders are increasingly seen less as barriers and more as windows of opportunity for merchants and consumers. Granted, they are windows that may often have really complicated regulation latches – and, it seems, no two latches are the same. So, while cross-border commerce is bumpy, to say the least, the interest in traveling down oft-uncharted, unpaved roads (and oceans and skies, for that matter) and through these windows is clearly of increasing value to more and more companies, countries, merchants and consumers every day.
The March edition of the PYMNTS X-Border Payments Optimization Tracker™ features the latest news and supplier/provider updates of those players collectively trying to seamlessly connect consumers and merchants worldwide. Now keeping tabs on 78 global payments service providers, this monthly Tracker is the framework for evaluating players in the cross-border payments landscape.
In addition to a number of notable nuggets coming out of China, such as Tmall Global recently reporting a 2015 increase of 179 percent in total value of purchases placed through the platform and Global Payments’ recent announcement that it will support Apple Pay in the country, we are also following other major developments in the cross-border ecosystem, like GAIN Capital’s entry into the $54 billion industry.
Is Airbnb equipped to handle the upcoming Olympics surge in Rio?
For our March X-Border Tracker cover story, we interviewed Nagarajan Rao, Transpay’s SVP and global head of business and product, about the challenges of regulated global money movement, especially when magnified by a large event like the upcoming Olympics in Rio de Janeiro. To highlight these challenges, our discussion focused on Airbnb — the official alternative accommodation services supplier for the Summer Games — a notable player with a lot to gain, or lose, from the approaching swell of visitors coming to Rio.
Here’s a sneak peek
International transactions are difficult to begin with, Rao said. “Cross-border payments is a very complicated business for a lot of companies,” he said. “This stands true especially for marketplaces that are growing literally like wildfire around the world,” like Airbnb, he said. From the perspective of a payments provider himself, Rao said the most important aspect of a viable long-term solution is being able to accommodate all the different regulations and complexities of each individual country a particular business is operating within. He added that he thinks a lot of payment providers are presently “ill-equipped to provide a solution.”
A major challenge Airbnb faces, Rao said – especially in a heavily regulated country like Brazil – is that the platform uses costly third-party providers for payments. This means, he said, hidden fees for both hosts and guests. And when there are hidden fees, he said, there becomes the disintermediation issue — disintermediation outside of the platform, that is. A satisfied host and guest combination, he explained, can go rogue and leave a platform to avoid fees if they want to do business again down the road. “In the future, there is a risk that someone who stayed with them once can always go back to them and actually stay with them again, bypassing the Airbnb or the HomeAway platform,” he said.
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About The Tracker
The PYMNTS X-Border Payments Optimization Tracker™ is designed to provide an organizing framework for evaluating the many players that provide merchant payment processing services geared for cross-border payments.