Clarity into payments is highly desirable. Even more so for cross-border payments. Having visibility into what payments are coming in and going out can help you manage your cash flow and plan your growth. When you track your payments in real-time and harvest meaningful data from them, you can build a more competitive business and a superior user experience for your buyers and suppliers. No fretting and worrying about delays, no frustration while reconciling payments against invoices, no worries about meeting compliance rules. Richer data can make all the difference. Yet, businesses struggle to use data and insights the right way, sometimes simply because they are still using legacy systems and old methods. In this article, we talk about how payment automation can help solve some of your cross-border payment woes. Read on to know more.
What are cross-border payments?
Cross-border payments, also called international payments, are payments where the payer and the recipient are located in separate countries. They include wholesale (made between businesses) and retail (between individuals and businesses) cross-border payments. Remittances also fall under cross-border payments. Cross-border payments can be made in several ways, including bank transfers, credit cards, or newer methods such as digital wallets.
If your business sells to customers and/or works with suppliers who are not from your country, cross-border payments are for you.
Why do you need cross-border payments?
The boom in e-commerce following the pandemic has ushered in major changes in the way people shop and pay. Hence your business and payments strategy must be aligned with these changing needs and preferences, else you risk losing out to competitors. International markets are a focus area for businesses looking to tap into markets outside their home country and reach newer customers. Plus, working with suppliers and affiliates in other countries also helps you reduce the dependencies of your supply chains. But in order to work with international partners and sell to an overseas customer base, you must first be able to accept cross-border payments. Having the right payment strategy in place helps you to offer a localized experience to buyers and thus enhance the user experience.
Challenges facing cross-border payments
Despite huge leaps in technology, cross-border payments are plagued by issues such as higher costs, slow processing times, and compliance with local and global payment regulations.
- Higher costs: Cross-border transactions are more expensive than domestic payments. This is because of additional costs related to currency conversion, bank and intermediary charges, processing charges, and regulatory costs.
- Slower transaction processing: Cross-border payments are routed through a complex network of banks and intermediaries. Hence, these payments can take up to five days to process and clear, which is much slower than domestic payments.
- Payment regulations compliance: Cross-border payments require compliance with local and global payments laws. For example, in Europe, all businesses that make or receive international payments have to abide by the PSD2, AMLD, and GDPR laws. Plus, you need to comply with PCI DSS standards if you collect, store, and process sensitive payments data of your customers.
How payment automation makes cross-border payments easier?
Payment automation help you deal with the challenges that cross-border payments throw up. It makes your entire payments system more efficient and intelligent so that you can run your business smoothly.
Here’s a quick look into how:
1. Multilingual and multicurrency payment options
Payment automation allows you to offer greater localisation in your payments. This means you can support local payment methods that are popular in a particular market and are preferred by buyers there. When you allow your customers to pay using methods of their choice, or if you pay your suppliers in another country via their preferred method, it creates a better user experience and strengthens your relationship with customers and vendors.
Payment automation helps you to support multiple payment methods, in multiple currencies, and in their local language. For example, when you use Novalnet’s payment platform, you can accept payments globally in 125+ currencies and over 150 country-specific payment methods. This helps you to create seamless payment experiences and enhance the value your brand offers.
2. Higher payment acceptance rates
An automated payments platform improves your payment acceptance rates. Payments fail for many reasons – insufficient funds, incorrect or expired payment details, sometimes even too strict risk rules. Payments automation tools can help you mitigate these issues. For example, you can use card-on-file to save customers’ payment and avoid incorrect data entry. Or, using account updaters to automatically update payment details for expired or reissued cards. Or, using 3D Secure to authenticate payments and reduce friction in checkout.
Such features help to ensure customers can complete their payments easily, and thus, enhance the user experience. Plus, when you work with a payments services provider like Novalnet, you get the benefit of our multi-acquirer relationships to ensure payment go through. Our use of intelligent payments routing also ensures payment failures are minimal.
3. Dashboards to track payments in real time and manage cash flow
Payment automation helps you track your payments in real-time and get access to detailed data, including payment history and invoice status, in a more organized way. This gives you a single view into all your payments, thus helping you avoid delays in payments and manage your cash flow. It gives you real-time insights on your working capital, availability of funds, expenses due, etc. This helps you make more detailed, in-depth cash flow forecasts, and take informed decisions for your business. When you use Novalnet’s platform, you get a single view into all your payments in real-time. You can schedule payments, track, and reconcile them from a single dashboard. This simplifies all your payment related tasks.
4. Easy reconciliation of payments against invoices, saving staff time and costs
With payment automation, richer data accompanies each transaction, helping you to easily reconcile payments against invoices. This saves your accounts staff loads of time and effort. Instead, staff can focus on other critical tasks that demand attention.
5. More data helps to analyze trends, take more informed decisions
Payment automation help you capture richer payments data. You can analyze this data to draw insights that help you improve your processes and become more efficient. It also helps you to align your strategy to meet the needs of customers in different markets and meet them where they are.
This helps boost customer loyalty and brand value proposition.
6. Meet compliance rules
Automated payment platforms help you to comply with all local and global payment laws. For example, in Europe, all businesses that make or receive international payments have to abide by the PSD2, AMLD, and GDPR laws. All payment platforms also need to be PCI-DSS certified. Novalnet’s payment platform is compliant with all regulations and laws in Europe and worldwide. This helps us process payments securely and take care of all the compliance, leaving you free to focus on your business.
How can Novalnet help using payment automation for cross-border payments?
We can help you to automate your payments and quickly start accepting payments from across the world. As trusted advisors to Europe’s leading brands on all things payments, our state-of-the-art technologies and methods help businesses like yours accept payments globally. 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, and with zero hassle.
Reach out to us today to know more.
Jose Augustine is the Chief Business Development Officer at Novalnet with extensive experience in European payment industry and a knowledge powerhouse.