Currency Matching Innovations Unlock Competitive Advantages in Cross-Border B2B Payments

In cross-border payments, getting paid isn’t just a matter of when — it’s a matter of how.

News broke onWednesday (Dec. 11) that financial platform Loop, in collaboration with EQ Bank, launched the Loop Global Visa Card to enable small- to medium-sized businesses (SMBs) to spend and settle credit balances in multiple currencies. It is one example of firms looking to expand internationally turning to currency matching to do so.

With the complexities of fluctuating exchange rates, disparate financial systems and opaque fees, businesses engaging in cross-border B2B payments often find themselves navigating a minefield.

The inefficiencies can be crippling. Currency conversion fees, unpredictable exchange rate movements and delays caused by intermediaries often erode margins and introduce operational uncertainty, a situation that only gets compounded for SMBs, which lack the resources and financial expertise to navigate the foreign exchange (FX) markets effectively.

Against this backdrop, innovations in currency matching, as well as a shift toward virtual cards, are emerging as a critical lever for companies looking to unlock competitive advantages in this high-stakes arena.

Read more: Can Payments Innovations Solve U.S. Merchants’ Top 5 Cross-Border Challenges?

Smarter Currency Matching Can Unlock Better Cross-Border B2B Payments

At its core, currency matching seeks to optimize cross-border transactions by identifying and pairing incoming and outgoing payments in the same currency. This approach helps minimize the need for conversion, ultimately reducing both costs and exposure to exchange rate volatility.

By leveraging advanced data analytics and artificial intelligence (AI), currency matching platforms can now automate these processes, aligning transactions in real time and ensuring efficiency at scale. For instance, a U.S.-based exporter receiving payments in euros can offset these inflows against outgoing payments to suppliers in the eurozone. The result? Fewer currency conversions, lower fees and a streamlined payment workflow.

These ongoing advancements in technology are pivotal in making currency matching accessible and scalable. Real-time payment networks, APIs and AI-driven FX management tools are increasingly working to transform a once labor-intensive process into an automated solution.

A key innovation is the integration of machine learning algorithms that predict cash flow patterns and recommend optimal currency matching strategies. For treasurers and CFOs, this functionality translates into better liquidity management and more predictable financial outcomes.

“Many people are unaware of more viable, cost-effective and efficient methods for making cross-border payments,” Dean M. Leavitt, founder and CEO of Boost Payment Solutions, told PYMNTS, noting that “cross-border payments for enterprise-level B2B transactions are inherently complex.”

Read more: What on-Soil Requests Mean for Cross-Border Payments Compliance

Strategic Benefits Beyond Cost Savings

In an increasingly interconnected global economy, businesses cannot afford to leave money on the table when it comes to cross-border payments.

“If you look at the cross-border payment space over the last five years, the payment volumes have grown,” Chandana Thanthrige of Bank of America told PYMNTS.

But as PYMNTS Intelligence’s “Cross-Border Sales and the Challenge of Failed Payments” revealed, faulty cross-border payments cost U.S. merchants at least $3.8 billion in sales last year. Additionally, 70% of U.S. firms experienced higher rates of failed payments in cross-border sales compared to domestic sales.

“The more parties there are in a transaction, the more risk there is … information is not passed along in the same exact fields as it moves between providers,” Nium Chief Payments Officer Alex Johnson told PYMNTS. “As you eliminate some of the intermediary layers of a transaction, there’s less opaqueness, and the transactions are more cost-effective. It’s not just about the speed of the transaction; it’s about the transparency and knowing where it is at every point of time.”

Real-time currency matching isn’t the only factor at play in helping build a more streamlined, simplified and cost effective cross-border B2B ecosystem. Regulators and policymakers also have a role to play in fostering a competitive, transparent cross-border payments ecosystem. For example, global initiatives like ISO 20022, aimed at standardizing payment messaging, could further facilitate the adoption of currency matching and related innovations.

As PYMNTS’ Karen Webster noted in an earlier interview, the focus on cross-border innovation needs to be on solving key frictions: moving money securely and safely, providing transparency throughout the process and optimizing the economics of cross-border transactions.

Seamless and efficient cross-border payments have become more important as businesses look abroad for new markets and customers, according to the PYMNTS Intelligence and Citi collaboration, “The Treasury Management Playbook: Spotlight on Cross-Border Payments.”