Shipmate Fulfillment On Using Payment Orchestration To Break Down Cross-Border Barriers

Countless international growth opportunities for eCommerce businesses have cropped up in the past 16 months. Consumers around the world have begun shopping and paying online more than ever, taking advantage of the internet to have round-the-clock, instant access to millions of retailers both near and far.

Supply chains are becoming more global, and eTailers around the world are growing more eager to tap into consumers’ expanding demand for eCommerce experiences, but building the payments procedures needed to underpin global supply chains is no easy task.

Brian Antar, CEO of Shipmate Fulfillment, a Philadelphia-based logistics startup that warehouses, packages and ships eCommerce orders, told PYMNTS about the payments roadblocks that can prevent businesses from establishing themselves in international markets and how payment orchestration can help alleviate those frictions.

Cross-Border Barriers

Preparing to tap into the intensifying global demand for eCommerce experiences can be prohibitively expensive and time-consuming, especially for businesses that are engaging with markets and providers for the first time.

“A business entering a new international market can face numerous issues, including setting up a new entity, creating a new bank account, filing local taxes, navigating the tax implications at home and more,” Antar explained.

The coordination needed to take even these basic first steps, with setup and maintenance, costs more effort than many companies can anticipate, meaning that numerous businesses have a reduced chance of expanding quickly and without friction into international eCommerce.

Even businesses that manage to establish a presence in national markets often encounter enough cross-border payments friction to bring their supply chains to a halt. Antar used the example of a hypothetical international business receiving an invoice from a cross-border supplier to illustrate these frictions. Suppliers in these situations would most likely request payment in the form of a wire transfer, which is by far the most common way to make and receive cross-border payments.

“Issuing a wire, however, is subject to potential fraud, either from a phishing scheme, the factory itself, the recipient bank or government or something else — and it requires very specific instructions for delivering the payment to the proper recipient,” he explained.

These complications magnify when merchants become bigger and need to handle millions of transactions every day.

Using an old payments setup to accept cross-border payments does not alleviate these frictions, either. Cross-border barriers exist regardless of businesses’ transaction processes.

“No matter which payment solution you use, you’ll find frictions around time, security, compliance and trust,” Antar said.

He asserted that there is a universal need for eCommmerce businesses to find solutions that can help them mitigate these frictions, which threaten to reduce the gains they could otherwise potentially unlock by expanding into new markets.

Orchestrating A Solution

Partnering with third-party providers that specialize in facilitating smooth, cross-border payments can help alleviate many roadblocks encountered when accepting payments from international business partners. An international business might partner with a payment service provider (PSP) that provides digital compliance solutions to reduce the resources spent ensuring that cross-border payments meet local compliance standards, or it might partner with a local payment gateway to eschew having to use wire transfers.

There is no limit to the number of PSPs with which international businesses might partner, either. Many businesses, including Shipmate Fulfillment, use many PSPs at once to address different frictions that hinder their cross-border operations.

“We work with partner companies that specialize in cross-border payments, so our business can bill and collect smoothly,” Antar confirmed.

Leveraging many different PSPs at once to overcome payments barriers is common for companies, but doing so can also become a source of friction in itself. It takes time and resources that many businesses do not have to manage the business relationships needed to work with PSPs.

A payment orchestration layer can be particularly useful in these scenarios. It provides a single access point through which international businesses can manage the relationships they share with the PSPs they need to power their cross-border transactions. It also allows them to more easily consolidate and address many of the frictions they might encounter during such transactions, including slow speeds, security concerns, compliance requirements or adding or removing multiple payments gateways to their payments stacks. The result can be faster times to market, smoother overall payments flows and stronger supplier relationships.

“An international business can go to market much quicker with a payment orchestration system and help bring more confidence to its vendors,” Antar said.

Such systems can therefore be invaluable for businesses looking to partner with PSPs that empower them to capitalize on the surging global demand for online shopping experiences.