The foundation of cross-border payment has a mixture of speed, low costs, transparency, and unlimited access to funds transfer in the finance section. They’re the building blocks used to improve international trade for B2C or B2B and promote economic growth.
Recently, technological innovations have refined the international payments systems to increase service delivery for businesses and facilitate seamless financial transactions worldwide.
Cross-border payments rely on the partnership of banks who authorize the exchange of funds and carriers who transfer the money upon fulfillment of the business agreement. They aim to complete transactions through transparent means and allow real-time tracking of the money on transit.
The revolution in the digital space is forcing businesses to review their cross-border payment systems to improve how to pay international suppliers. The effects of technological innovations have reduced delays and fraud common in the financial sector through archaic means of cross-border payments.
Below are five innovations in cross-border payments.
1) Digital Currencies
For over a decade, digital currencies like Bitcoin and Altcoins have gradually penetrated the imports and exports arena. They aim to increase how services are delivered across the divide. Such innovations encourage businesses to shift their payment plans to digital channels to optimize international trade opportunities.
In addition, the digital currencies run on blockchain technology that’s equivalent to a virtual spreadsheet for maintaining real-time transactions across borders.
However, not all countries have opened doors to digital currencies due to underlying factors attached to cross-border payments. Also, the digital currencies are decentralized, making it hard for countries to regulate, plus they’re competing with fiat money in the foreign exchange.
2) Application Programs Interfaces (API)
Integrating cross-border payments systems and customer loyalty products like mobile applications redefines international trade and foreign exchange. Businesses are developing payment solutions that promote convenience for suppliers and their customers.
API’s allows price control per the currency of entities involved in the cross-border business and the current exchange price at the Forex markets. Also, the finance department can leverage the best exchange prices due to market volatility in a trading window.
The application programs have given birth to digital payment solutions that have been widely accepted for business transactions. For instance, PayPal worldwide to Mpesa, Kenya (money transfer handlers) can transmit funds from Europe to Africa or vise versa after clients agree on payment terms at a small fee.
3) Virtual Accounts
Virtual accounts mean unlimited opportunities in terms of currencies, countries engaged in business transactions, and cross-border payments in the imports and exports ventures. In addition, it promotes the paperless exchange of information when processing payments worldwide.
The setup can be configured according to your business operations and customer preference to improve transparency and efficiency throughout the payment process.
Furthermore, virtual accounts come with security measures to counter risks and other online exposures that befall archaic cross-border payments. Businesses can own multiple virtual accounts for processing payments in different transactions and maintain reports for future reconciliation of funds transferred.
Businesses can deposit funds in virtual accounts and order supplies on a reducing balance basis. It lifts the burden of lengthy banking processes, saves time and money for companies in the various regions of the globe.
4) Network Enabled Payments
Business net worth is equivalent to the network connections in any market. Within the same links, cross-border payments solutions have continued to pop up due to innovations in the funds’ transfer systems.
Network-enabled payments provide privacy and transparency for business entities, allowing them to track the funds and estimate when the transaction will clear in the systems. Also, the government can monitor the trade proceeds and collect the taxes seamlessly in a harmonized manner through a network portal.
5) Mobile E-payment Solutions
The digital age demands that attention be given to innovative solutions to increase efficiency in service delivery and cut back on costs of doing business. Mobile phones or smart gadgets are being incorporated in the money transfer to reduce the friction between businesses and banks or financial institutions.
Businesses can approve overseas payments from a mobile phone without stepping a foot in the banks. Also, smart gadgets can give real-time statements of accounts, making it easy to determine whether or not the bank balance is sufficient to make cross-border payments.
Furthermore, it’s easy to trace funds or recall wrongful funds transfers by simply calling the bank to cancel the transaction.
Technological advancements are quickly changing various aspects of the imports and exports sector. In particular, cross-border payments have shifted from archaic infrastructure and systems to enhanced interfaces. The innovations constantly review the funds’ transfer structure by focusing on time, transparency, and efficiency on overseas payments.