Midmarket Firms Seek Cross-Border Payments Stability, Convera CEO Says

No matter the vertical, the world in which enterprises operate is ever more complicated. Supply chains are constrained. Interest rates are volatile. And currencies gyrate wildly against one another on the threat that the current Russia-Ukraine conflagration might escalate and spread.

Through it all, buyers and suppliers must still source — and pay for — the goods and services that keep the global economy humming. The sheer proliferation of payments rails means that their back-office processes can become unwieldy.

PYMNTS’ data makes the need compellingly clear: 60% of chief financial officers (CFOs) want to optimize their payments processes. And faced with mounting competitive pressure and wider global uncertainty, many of them are casting a jealous eye at the sophisticated currency trading and other payments-related services the largest players in the space have access to.

The problem is especially acute for middle-market firms seeking to navigate a B2B market that tops $130 trillion annually, Patrick Gauthier, CEO of Convera, the rebranded Western Union Business Solutions that launched Tuesday (March 1) told PYMNTS’ Karen Webster.

Read more: Western Union Business Solutions Now Convera

Companies with top lines of $1 million to $1 billion — law firms, non-governmental organizations (NGOs) and manufacturers — all want to move beyond business as usual, he said. And they’re tired of the paper-based processes they’ve long had to accept because their pockets aren’t deep enough to merit white-glove treatment from traditional banks.

As it stands, Western Union Business Solutions — acquired by Goldfinch Partners and the Baupost Group in August for $910 million and now operating as Convera — is the largest global B2B payments platform that isn’t owned by a bank, Gauthier said.

“We take the great unknowns and the fluctuation away from them and allow them to focus more on their businesses,” said Gauthier, although Convera’s operations deal with currency, derivatives and forward contracts that all can aid with managing volatility.

The company strives to make global payments easier for more than 30,000 companies and has 60 global banking partners, noted Gauthier. Convera’s book of business is not necessarily economical for its bank partners, so the firm does not compete with them. Instead, Convera expands banks’ capacity to serve enterprises that might otherwise never be served.

Convera had a record 2021, with revenue growth of more than 20% and payments volume of $170 billion.

Modernizing Payments

In an example of how business as usual can change for the better, Gauthier pointed to the higher education sector, where international students are an increasingly important part of the equation. They are often making the biggest financial transactions of their lives so far, and accomplishing those easily is critical.

“Paying tuition can be a stressful moment for these students,” he said.

To experience the pain points firsthand, just try to do an international wire. Odds are you may not necessarily know just when that transaction settles, he said.

For universities, making payments easier and more transparent can go a long way toward cementing student satisfaction, and it also solves an operational pain point — saving repeated inbound phone calls to the bursar’s office.

“The key is to have a partner that is going to provide them with the certainty that the transaction will be completed without fail,” he said.

The Infrastructure

Gauthier said that surety is in place due to three layers of infrastructure, including the technology itself, the bank network, and the compliance that all have been built up over years.

As the transaction took shape from the August announcement to the close this month, the company has done a “ton of work” to extract the B2B organization and infrastructure from Western Union (WU) in a way that is seamless for both the unit’s customers and its employees, he said.

It’s a heavy lift as separating two companies is a lot harder than merging two companies. After all, the systems and processes are all interconnected. The “easy” transition has been taking WU employees on board, but subsuming the corporate services operations has been harder, spanning accounting, treasury and HR, he said.

“You have to separate all that, and there’s been a lot of work done over the last six months to put in place that corporate infrastructure in parallel, in order to get all the regulatory approvals,” he said.

That parallel structure also had to keep engaged with all of WU’s business banking partners, which Gauthier termed the “hidden gem of this business,” which in turn allows the newly launched Convera to conduct business, uninterrupted, globally.

Looking ahead, he said, counterparty relationships will evolve over time, as will the rails themselves that underpin bank networks, such as real-time rails. WU’s technology infrastructure represents a significant opportunity, and Convera can extract it from the money transfer giant and use it to build services that are more B2B focused.

Through the next several months, Gauthier said, there still will be focus on building various business operations into Convera (human resources, for example) and getting operating licenses in Europe by the third quarter of this year.

“After working on this for six months, I’m more convinced than ever about Convera’s opportunity within B2B — and that the future is bright,” he told Webster. “Our mission in life is to make it easy for a company to move money so they can focus on growing with confidence.”