The Issue with Cross-border Payments
Convenience lies at the heart of payments today. We can’t imagine a life without instant payments. A smooth and seamless payment experience is deemed essential. It has never been easier to make payments – whether it be sending money to friends, splitting bills, paying for a cab or food delivery, you name it. Yet, the same ease is somewhat missing in B2B cross-border payments. Cross-border payments remain notoriously slow, taking up to 55% longer to receive as compared to domestic payments.
Late payments are an issue in Europe. A recent study found that nearly half of invoices in the region were past their due dates. 38% of companies were concerned they would not be able to collect overdue payments. Firms facing payment delays often struggle to pay their own suppliers on time, creating a domino effect.
Why Late Payments are Bad for Business
Delayed payments impact cash flow, hurting small businesses who rely on ready availability of funds to keep daily operations running. Late payments lead to a bad user experience, souring relationships between buyers and suppliers. Not to mention, tons of worry and possible disruption of business. Add to this the threat of fraud, and you have a perfect storm.
Businesses Are Still Using Legacy Methods
Most businesses, in fact, 81% of merchants, still rely heavily on traditional paper-based methods such as checks to make payments. But these methods are not only expensive to process, they are slow, and are vulnerable to fraud. All of these can create an unpleasant experience for customers and suppliers. By contrast, alternate digital payment methods make cross-border payments simpler, faster, and safer. They are also easier to collect and less expensive to process. Hence, businesses must look at ways to balance speed, security, and convenience and deliver a superior customer experience.
What Should Businesses Focus On With Cross-border Payments?
- Enhancing customer experience in payments is imperative. Businesses must invest in newer, more innovative ways to make B2B cross-border payments faster and more seamless. Leaning on legacy methods might turn out to be inefficient and expensive in the long run.
- Strong security measures to counter the rise in fraud and comply with local laws is imperative and of strategic importance.
What We Recommend to adopt Cross-border payments
Cross-border business payments need not be stuck in the same old rut. In fact, there are methods available that businesses of all sizes can adopt to make cross-border payments in real-time. Here’s a look at a few:
1. Real-Time Payments
Real-time payments are instant digital payments that can be made 24×7 round the year. An example of this is a SEPA Instant Credit transfer, which lets you transfer up to €100,000 at a time, within seconds. The development of open banking rails in Europe have made them a reality today. Real-time payments are quick, secure, and simple. This makes them a great choice for cross-border commerce. Users can transfer money quickly and easily between bank accounts or make retail payments within one country or across borders. Plus, real-time transfers do not come with card processing and interchange fees, which makes them a more cost-effective option than cards.
Examples of real-time payment networks in Europe are SEPA, TARGET Instant Payments Service (TIPS), Faster Pay in the UK, and P27 for the Nordics.
2. Digital Wallets
Digital wallets are a quick and secure way of making cross-border payments. You can use international digital wallets to make cross-border payments without additional fees or processing times. Hence, they turn out much cheaper. B2B payments through e-wallets are a great option for smaller merchants, as it helps them to receive payments in real-time and opens up their cash flow.
PayPal, Apple Pay, and Google Pay are some of the most-widely used e-wallets in Europe. They are quite popular with users, with over 44% of people preferring to pay with digital wallets. They are convenient, secure, and easy to use, hence their broad appeal. Reports predict that by 2025, mobile wallet transactions in Europe will increase by 277%.
3. SWIFT Go payments
SWIFT payments are the global standard for cross-border payments. They are secure, and clear quickly. SWIFT Go is a new service targeting small and medium-sized businesses. It allows merchants to send cross-border payments anywhere in the world, directly from their bank accounts, in a fast and highly secure way. The service can be used to make or receive low-value cross-border payments of up to 1000 USD, EUR, or GBP. More currencies are being added as more banks join the network. Currently, 250+ banks in over 70+ countries use the service.
How Can Novalnet Help
Novalnet is a global PSP with decades of experience in helping Europe’s leading brands process their payments. We can help you create a payments experience that will delight your customers and boost your brand. Our automated country-specific payment selector displays an optimized collection of payment types during checkout, adding trust and comfort while avoiding friction and clutter. From our instant payment plug-ins to our AI-based risk management tools, we have the resources to get you up and running with your payments in a short time, with minimal coding, and all in a fully secure PCI DSS-certified environment.
Reach out to us today to know more.
Antony Robinson is an experienced IT expert, information architect and a customer experience evangelist. He has over 30 years of experience in web technologies, user experience, media, and marketing. Antony is currently the CMO of Novalnet AG, a fintech company in Germany. As CMO, he leads the company’s marketing strategy and fosters collaborations. Antony’s expertise and dedication to technology and innovation make him a valuable leader in his field.