COLUMN: In payments and receivables, the focus on global sharpens

It’s obvious. As economies become more global, cross-border transactions become a lot more common. We can see it across a variety of industries.

With the emergence of a strong middle class on every continent, international education is now available to the masses. In 2017, more than five million students pursued education outside of their home countries. By 2022, seven million students will spend an estimated $70 billion per year doing the same.

Approximately 14 million patients travelled outside their home country for healthcare in 2017, spending over $60 billion according to Allied Market Research.

That number will reach $165 billion by 2023.

Over $7 trillion worth of goods are exported every year from developed nations, and that does not include China and South America. 80% of those transactions are B2B.

What’s not obvious is the industry’s response to these trends. Despite this exceptional growth, cross-border payments remain complex and costly. Incumbents (namely large banks), continue to hamper customers with high FX costs, hidden fees, and slow payment delivery.

Additionally, the lack of transparency makes it difficult to reconcile transactions for both payers and receivers. For businesses, there are a variety of other obstacles as well. Selling in different countries may require local bank accounts, certifications, relationships and more in each to be able to accept payments. It’s costly, time-intensive, and bad for business.

Fortunately, the industry is beginning to respond – with recent moves across the payments ecosystem targeting the challenges in international payments and receivables.

PayPal has entered into partnerships with banking incumbents like Visa and JP Morgan, and international payment specialists like Flywire – to simplify cross-border payments for their users, and make PayPal a more viable option for cross-border payments.

First Data, one of the world’s largest payment processors, has also entered into a relationship with Flywire to reduce the cost and complexity for their clients to accept and process large international payments.
Long-time incumbent Swift has made several recent announcements regarding its new gpi (global payment innovation) initiative – aimed at removing some of the friction typically involved in its processing of international payments.

This includes relationships with the likes of BofA, Citibank, and Mastercard.

Even companies like IBM are getting in on the action, teaming with a pair of tech startups on a solution for banks which uses Blockchain to reduce settlement time and lower the cost of global payments.

These recent moves represent just some of the progress in cross-border payments and receivables. It’s long overdue, but it reflects the global reality of the economic environment we live in and the huge opportunity that exists for players across the ecosystem.

Going forward, expect to see a lot more of it as the industry looks to address both sides of the cross-border payment relationship to make these transactions as seamless as domestic payments and receivables for everyone involved.

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