Current cross-border payment systems are complicated and often lack transparency. Legacy systems and platforms cannot be upgraded overnight, and rolling out new infrastructures is costly and time-consuming. However, a new breed of global payment solutions is emerging that harnesses the potential of innovative technologies for improving cross-border payments.
Here are some functionalities that are transforming the processing of cross-border e-commerce payments – and making it easier than ever for merchants to expand to new markets.
By allowing merchants to speed up cross-border payments and avoid FX fluctuations, modern payment technologies help merchants stay competitive when selling internationally. Such solutions accelerate and simplify the process to make it time- and cost-efficient, and more transparent.
Suppose you have a cross-border transaction settled in 3 to 20 minutes. In this scenario, there’s no room for currency fluctuation. That’s why it’s cost-efficient – merchants don’t risk losing money because of currency fluctuations. If the settlement takes a couple of days or even weeks, all the currencies involved in the cross-border transaction are likely to fluctuate and potentially have a negative impact on revenue.
Innovation in payment rails
One of the biggest issues facing merchants in the context of cross-border payments is slow transaction speed. Innovative solutions address this problem using new types of payment rails technologies.
The space of cross-border payments is evolving quickly, with a growing demand for real-time payments in both B2B and B2C transactions. Through global partnerships and the usage of new types of rails rather than SWIFT, payment providers can offer senders more ways to make foreign exchange payments in real time. Instead of a prolonged settlement period, businesses can pay their out-of-country customers and vendors instantly, with little or no friction.
Real-time FX rates with APIs
Treasury departments within global organizations have tested multiple digital solutions to optimize their workflow and increasingly use APIs to achieve their objectives.
By using APIs, large organizations can access real-time FX rates directly from existing systems and effectively manage currency exposure, minimize risk across their global accounts, and speed up reconciliation thanks to having FX rates earlier in the process.
API use also opens the door to locking in FX rates for predetermined periods, allowing merchants to price goods in the best currency for their clients while efficiently managing funds on the backend.