With widespread internet throughout the world and global browser numbers on the rise, there is no ignoring the fact that the world needs more accessible cross-border payment solutions. Cross-border payment revenue was expected to hit 1.9 billion dollars in 2020 and is expected to grow fast in the consequent years as emerging economies start becoming more digitally integrated.
As places like Brazil, Thailand, India, and others start becoming electronically accessible, the need for cross-border payments will increase. According to experts, Europe will see the most significant rise in the coming year, with the Asia Pacific and Latin America following behind.
At the ZED Network, we work with international businesses, FOREX firms, Fintech companies, and many other companies to provide them with the perfect payment orchestration layer to ensure smooth financial flow across multiple countries. Being a specialist in cross-border payment orchestration, we thought we should let you know how it works and what you should know about them. In the following passages, we will talk about all that and more, So without further ado, let’s begin!
What Is Cross-Border Payment?
The name says it all. Cross-border payments are transactions where the payee and the transaction recipient are based in different countries. These transactions can be between individuals, companies, to banking institutions sending and receiving money from across the border. We here at the Zed Network specialize in working with companies and multinational businesses, so that’s what we will talk about here, but the general idea is the same for everyone, more or less.
A business that needs to send or receive money from multiple countries usually requires a payment orchestration solution to take care of all the payments and regulations regarding cross-border payments. That’s why choosing the right cross-border payment orchestration service provider is key to succeeding internationally. So now that you know what cross-border payment is and why you need the right cross-border payment gateway let’s dive a little deeper.
What Should You Look For In Terms Of Receiving Cross-Border Payments?
According to Zed Founder and entrepreneur Alan Safahi, international businesses should look to work with payment orchestration providers that are well equipped to provide a secure global payment solution. Cross-border payment orchestration service providers work as a switch between the various payment network players, ensuring smooth flow of funds across borders. So these companies should validate the payment and encrypt the sensitive financial data between the relevant parties.
For multinational businesses and FOREX firms, the need for this is even more compounded as they need a wide range of payment solutions and settlement currencies all rolled into one. Accepting local currencies is the best way to get a broader acceptance rate in the country the business is operating in. Think of it this way: someone living in South Korea buying a product from a U.S. company. Now, the average person may not know the product’s cost if it’s in dollars, but they would in South Korean Won. So if they see the price in SKW, they would be more likely to spend. It’s that simple.
There are several different factors to consider for cross-border payment solutions. From the banks, the companies, to the regulatory institutes, several things have to be maintained constantly if you want to have a smooth international operation. In the following, you will find three of the easiest ways to ensure global success from your end. So let’s check them out!
Regional Payment Options
People in each country have different preferences, and as an international business, you need to find out what the people are comfortable with within the territories you operate in. While credit and debit cards are the most popular options for people, there are certainly other types of popular payment options amongst the masses.
Name brand credit cards might not be the cheapest option everywhere. Alternate payment methods are gaining traction everywhere, especially in emerging economies. For example, WebMoney’s eWallet is very popular in Eastern Europe and Russia, while WePay is one of the main methods of transactions for Chinese small businesses and people.
APMs have been growing fast, with it generating 43 billion dollars in 2019 revenues in China alone which far exceeded the 22 billion dollars revenue of the rest of the world combined, according to McKinsey. So working with a payment orchestration company that understands your need to integrate regional payment options becomes a vital factor, and we can help you out in that regard.
Working Through Local Partnerships
Working with local companies is often the only way to find domestic success in foreign territories. You usually need to partner up with local companies to help you understand the culture, social structure, business customs, consumer preferences, logistics, infrastructure, and legislation.
In some cases working with a local partner may even have added benefits like exemptions. However, if you are partnering up with local businesses, you would need a comprehensive cross-border payment gateway to ensure everyone overseas remains happy. So make sure you make the right choice when working with a payment orchestration provider.
Adopting The Local Language
Now, this is like common sense if you talk to people in their language, then they will trust you more than some foreign individual. That’s why adopting the local language works best. If you are working with prominent vendors, then they may already understand the language you speak. However, if you are collaborating with small businesses and vendors, then hiring local translators and proof-readers can have a high impact on your work. Also, if you have a consumer outlet, make sure you have all the local language content.
Just leave the cross-border payment issues with Zed and focus more on other aspects of growing your business. We’ll take care of the payment side without a hitch! So now that you know what you should look for in a cross-border payment orchestration service provider let’s talk about the types of cross-border payments out there.
What Are The Types Of Cross-Border Payments?
Credit and debit card payments, bank transfers, international wire transfers, and APMs are all types of cross-border payments. Different people have different preferences, and providing a tailored experience will make an international business thrive on the global stage. This is especially true for Fintech companies where the industry will be dealing with several different currencies.
For Fintech companies, the need for a wide variety of payment acceptance and payment data security is a high priority. It needs to cover all bases and offer multiple ways for its clients to make payments from across the border. From significant business transactions to small e-commerce payments, credit cards are still one of the most popular cross-border payment options out there. While usually the payments are from individuals, there are instances where companies pay foreign expenses through company credit cards.
As for large business transactions, international wire transfers through a bank or another money transfer company are the most common option. However, going through a bank is usually time-consuming, very complicated, and sometimes expensive. That’s why multinational companies typically have their own payment orchestration layer where the POP or payment orchestration providers handle all the bureaucracy without wasting the company’s time.
Alternate Payment Methods are gaining traction amongst users, as we iterated earlier, so it’s no surprise eWallets are very popular for cross-border payments. However, eWallet transactions come with a caveat. Wallet to wallet transactions isn’t usually considered cross-border payments. Only when the money is transferred to the merchant’s bank account does it become a cross-border payment. As an international business, you see it is highly imperative that you work with a versatile payment orchestration provider that understands your needs and provides custom solutions accordingly. Now that we covered the types of cross-border payments let’s talk about the business to business or B2B aspect of it.
B2B Cross-Border Payments Explained
A recent study by Juniper Research shows that B2B cross-border payments are expected to 35 Trillion dollars within 2022, which is much bigger than the low 27 trillion dollars in 2020. However, the amounts in 2020 are lower due to the overall impact of COVID. The entire sector is ripe for innovation. Businesses are looking for simple solutions that can handle cross-border payments from a wide array of countries and can deal with their regulations with ease. That’s where ZED Network comes in.
We can work with 150+ currencies and can operate within more than 130 countries to ensure you have a smooth and seamless international operation. Our simple API fits seamlessly within any company infrastructure. We can handle the substantial transactional load of Fintech companies, FOREX firms, and other companies that deal with multiple currencies daily. Now that we’ve talked about B2B cross-border payments let’s move on to making international payments.
How To Make An International Payment?
The process is simple. All you need are details of the entity receiving the payment, along with the International Bank Account Number (IBAN) and Bank Identifier Code (BIC) to make an international bank transfer. If it’s a consumer paying to a merchant, then most of the legwork will be done by the merchant or the merchant’s payment orchestration service provider. SWIFT payments are also prevalent, especially for merchants who are paying the consumer or other businesses.
However, more and more international companies are looking to integrate custom payment orchestration infrastructure to bring everything in one place. The POP, yet, has to be able to provide secure and fast payments to be made directly while doing away with the bureaucracy surrounding international transfers. So when choosing your payment orchestration provider, check out their compliance and versatility, and operating capabilities in foreign countries.
The Challenges That Come With Cross-Border Payments
With cross-border payments, international businesses have quite a few obstacles to overcome. From the cost, “time taken “to complete the transaction, navigating several different territories to different regulation compliance in other regions, there is a lot that companies need to think about. Cost-efficiency is a significant priority for most businesses as many PSPs aren’t transparent about their foreign exchange rates and fees. According to Alan, as a merchant, you should be looking to work with payment orchestration providers who seamlessly can alleviate all the payment pain points without denting your operational budget.
We here at Zed Network do just that. Our F.X. rates are highly competitive, and we offer flat fees for our clients. There is no hidden charge, and every single aspect of the payment orchestration layer is transparent and within your control! Since we are talking about challenges, let’s talk about how long international payments take to get through next.
How Long Do International Payments Take?
The usual turnaround time for international payments to get through is two to five business days. However, the time is usually dependent on the funds sent and the number of intermediary banks in between. The more hoops the transaction has to pass, the longer it will take to complete the transaction. While the sector’s goal is real-time time cross-border payments, reaching it is a bit of a complex problem.
Unlike domestic payments, international payments usually have several different parties involved in the transaction. It may have to comply with regulations that make real-time cross-border payments impossible. However, working with a payment orchestration provider that can utilize local payment methods is a sure-fire way to make real-time cross-border payments a reality. Work with companies that offer you real-time payment tracking and upfront clear information about the fees.
Cross-Border Regulation Compliance
Cross-border payments could be much faster if companies didn’t comply with regulations set by different territories. However, that would mean the transactions would never be safe and global commerce would come to a halt if cross-border payments weren’t secure. That’s why different international territories have created financial regulations that have to be met to complete cross-border payments.
The E.U. has its own set of rules, as do other regions. As an international operation, you have to ensure your transactions comply with all the regulations set by all the territories you operate in. For that, you usually will need a huge team, but that isn’t very cost-efficient. That’s where POPs like the Zed Network comes who provide complete payment orchestration layers that comply with all the significant territories like A.U., CA, E.U., N.Z., S.G., U.K., and the U.S. Ensuring seamless cross-border payment solutions that can be easily integrated within your current business infrastructure!
Work With Innovators In Payment Solutions
So there you go, those are some of the most important things you needed to know about cross-border payments. As you can see, we believe that the cross-border payment sector needs innovation and should be accessible for more businesses. Our entire mission is to be the driving force of innovation within the payment orchestration sector to ensure seamless global trade.
So if you are looking for a simple payment orchestration that meets your international money transfer needs, then contact us, and we will take care of the rest. And with that being said, that’s all we have for you today. We will come back with something new for your soon. Until then, see ya!