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Businesses Need A Cross-Border Payment Solution For Massive Growth

B2B & D2C businesses must focus on their cross-border payments processes for global reach, client acquisition, cost control, remittance security & speed.


Cross-border commerce is a multi-trillion-dollar opportunity that is ready for disruption. While the possibility of selling and buying across borders has clearly gained prominence, organisations of all sizes (SMEs, MSMEs & large-scale) and industries face a slew of obstacles when attempting to enter international markets.



Cross-border payments market size

It is generally agreed upon that the cross-border payments market is growing in size and importance. The increasing globalization of the economy and the continued growth of e-commerce are driving demand for cross-border payment solutions. Additionally, the proliferation of digital payment technologies is making it easier and more convenient for businesses and individuals to make cross-border payments.

In 2021, the global B2B payments market was estimated to be worth USD 1,029 billion. It is expected to reach USD 2,242 billion by 2030, growing at an 8.9% CAGR over the forecast period (2022–2030). B2B payment facilitates secure transactions for businesses which require routine, periodic transactions and provides end-users with a variety of functions such as acquisition departments, payroll, accounts receivable and accounts payable. Based on the contractual agreement between the buyer and supplier, it may be a one-time payment or a recurring transaction. B2B payments are more complex than business-to-consumer (B2C) payments because they require more time to approve and settle the transaction.



Cross-border payments trends

According to a report by the World Bank, the volume of cross-border payments reached $26 trillion in 2018, and is expected to continue growing in the coming years. EY, the global accounting and consulting firm says, total global cross-border payment flows will reach USD 156 trillion this year, with B2B transactions accounting for USD 150 trillion. Cross-border business payments accounted for approximately 10% of total payments revenues for consumer and business segments worldwide - USD 1.9 trillion in 2020. However, the size of the market varies by region. Cross-border payment revenues were highest in EMEA (16%) and APAC (8%). According to McKinsey, a consulting firm, North America accounted for 6% and Latin America accounted for 5%. It is important to note that these estimates may vary due to the complexity and diversity of the cross-border payment industry.



Why are cross-border payments important

International trade: Cross-border payments facilitate international trade by allowing businesses to make and receive payments from customers and suppliers in other countries. This helps businesses expand their reach and tap into new markets.

E-commerce: Cross-border payments are particularly important for businesses that sell products or services online, as they allow businesses to accept payments from customers in other countries.

Remittances: Cross-border payments are also important for individuals who need to send money to friends or family members in other countries. Remittances play a critical role in many economies, particularly in developing countries, as they provide a source of income for millions of people.

Financial inclusion: Cross-border payments can help improve financial inclusion by providing a way for individuals and businesses in underserved or underbanked areas to access financial services and participate in the global economy.



Challenges faced by businesses in international markets

Businesses may face a variety of challenges when trying to secure a foothold in new markets. Here are a few examples:

Regulatory compliance: Businesses may need to navigate a complex regulatory environment in order to comply with local laws and regulations. This can include obtaining necessary licenses and permits, meeting health and safety standards, and complying with customs and trade regulations. Anti-money laundering (AML) regulations, foreign exchange (forex) regulations, Data protection regulations & Sanctions (political, country or company based).

New market knowledge: Another problem that businesses face when entering newer markets is understanding the market's complexities. This entails researching the local laws and regulations that apply to new business ventures, including their overall operations or dealings with local customers, in order to become acquainted with the local market culture and buying habits.

Quality standards & return policies: Different countries have different quality standards, and although companies can and do manufacture to regulatory requirements, with today’s stiff, competitive markets, it is essential to create a high-quality product at competitive pricing.

Cultural differences: Businesses may need to adapt to cultural differences in order to effectively market their products or services in new markets. This can include understanding local consumer preferences and cultural norms, and adapting marketing and sales strategies accordingly.

Language barriers: Businesses may need to overcome language barriers in order to communicate effectively with local partners and customers. This may involve hiring translators or local staff, or adapting marketing materials to different languages.

Competition: Businesses may face competition from local and international companies in new markets. This can make it difficult to stand out in a crowded market and attract customers.

Supply chain & logistics: Businesses may need to overcome logistics challenges, such as sourcing raw materials, managing inventory, and coordinating transportation and shipping. When it comes to international shipping, it is critical to track orders and meet shipping deadlines. Communication with on-the-ground logistics partners in other countries can also be difficult. Managing the paperwork associated with supply chain and logistics management is also a difficult task. Multi-carrier software platforms and Multi-purpose B2B cross-border payment platform softwares, for example, can assist businesses in locating the best shipping partner and planning payment schedules for higher output.

Financing: Businesses may need to secure financing in order to fund expansion into new markets. This may involve seeking loans or investment from financial institutions or other sources. Pre and post shipment cash-flow is essential, as this will assist businesses in purchasing or manufacturing goods on time and reduce any financial strain that may arise between selling the product and receiving payment.

Cross-border payment methods: It is critical to understand each country's payment mechanism as well as the various charges/costs associated with wire transfers. All cross-border payments should also be routed through an Authorised Dealer in Foreign Exchange. E-commerce importers and exporters might also be using the OPGSP (Online Payment Gateway Service Providers) system to receive and send cross-border payments.



Why businesses need a cross-border payment solution

Global expansion: If a business is looking to expand into international markets, it will need a way to receive payments from customers in different countries. Cross border payment solutions provide a secure and convenient way for businesses to receive payments from customers in other countries. Large enterprises are forecasted to grow at a CAGR of 8.8% till 2030 and SMEs (SMBs) will continue to be the fastest growing segment based on business size. This estimation relies on the forecasts of B2B cross-border payments market which is expected to see massive growth in the coming years.

E-commerce: If a business has an online store and sells products or services to customers in other countries, it will need a way to process payments from those customers. Cross border payment solutions can help businesses easily and securely accept payments from customers in other countries.

Supplier payments: If a business sources products or services from suppliers in other countries, it will need a way to make payments to those suppliers. Cross border payment solutions can help businesses make payments to suppliers in other countries in a timely and cost-effective manner.

Foreign currency exchange: When making or receiving payments in a foreign currency, businesses will need to exchange that currency for their local currency. Cross border payment solutions can help businesses exchange currencies at competitive exchange rates, reducing the risk of currency exchange losses.



How cross-border payment solutions help scale business

Cross-border payment solutions can help businesses scale by providing a convenient and cost-effective way to make and receive payments from customers and suppliers in other countries. This can help businesses expand into new markets and increase their revenue. Here are a few specific ways that cross-border payment solutions can help businesses scale:

Streamlined payment process: Cross-border payment solutions can make it easier and more efficient for businesses to make and receive payments in different currencies, reducing the time and effort required to manage international transactions.

Lower transaction costs: Cross-border payment solutions can often offer competitive exchange rates and lower transaction fees compared to traditional payment methods, helping businesses save money on international transactions.

Increased customer reach: With cross-border payment solutions, businesses can easily accept payments from customers in other countries, allowing them to tap into new markets and expand their customer base.

Improved supplier relationships: By using cross-border payment solutions to make payments to suppliers in other countries, businesses can improve their relationships with those suppliers and potentially negotiate better terms.



Cross-border payment solutions in the market

International remittance systems are financial systems or networks that facilitate the transfer of money from one country to another. These systems are often used by individuals or businesses to send money to family or friends in other countries, or to make payments to international partners or vendors.

There are several different types of international remittance systems, including:

Banks: Many banks offer international money transfer services, which allow customers to send money to bank accounts in other countries.

Money transfer services: Companies such as Western Union and MoneyGram offer international money transfer services that allow individuals to send money to recipients in other countries.

Online money transfer services: Online money transfer services, such as TransferWise and Xoom, offer competitive exchange rates and low fees for international money transfers. These services often allow you to send money directly to a bank account, debit card, or mobile wallet in the recipient's country.

Front-end & Back-end network based cross-border payment solutions: One of the lesser know facts about the cross-border payments industry is that there are technology companies whose services are used by banks and financial institutions to run their cross-border payments business. Fable Fintech is one of those back-end network based cross-border payment solutions. Experts, like Fable Fintech Pvt. Ltd., provide white-label and subscription-based remittance solutions for banks, financial institutions, B2B and e-commerce industries. They frequently collaborate with the banks, financial institutions for their cross-border payment solutions. Back-end networks allow interoperability in cross-border payments by building partner networks via direct links with regional banks and alternative payment methods in both liquid and non-liquid markets. Fable Fintech’s cross-border payment solution also allows the option to choose intermediaries and a configurable user-interface. These sort of remittance solutions are being used by SMEs and MSMEs for B2B cross-border business transactions more frequently now as cost-effective solutions.

Peer-to-peer (P2P) payment apps: P2P payment apps, such as Venmo and PayPal, allow you to send money to individuals in other countries. These apps often have low or no fees for international transfers, but the exchange rate may not be as favourable as with a dedicated money transfer service.

Cryptocurrencies: Cryptocurrencies, such as Bitcoin, can be used to send money internationally without the need for a bank or money transfer service. However, the value of cryptocurrencies can be volatile, and there may be risks involved in using them for money transfers.

It's important to compare exchange rates and fees when deciding which method to use for an international money transfer, as these can vary significantly depending on the service or provider.



Choosing a cross-border payment solution for your business

There are a few key factors to consider when choosing a cross-border payment solution:

Fees: Compare the fees charged by different cross-border payment providers to find the most cost-effective solution. Consider both transaction fees and exchange rate margins, as these can significantly impact the overall cost of using the service.

Exchange rates: Look for a provider that offers competitive exchange rates. Some providers may offer fixed exchange rates, while others may use a variable exchange rate that can fluctuate based on market conditions.

Speed: Consider the speed at which the provider can process cross-border payments. Some providers may be able to process payments within a few hours or days, while others may take longer.

Payment methods: Choose a provider that offers a range of payment methods, such as bank transfers, credit card payments, and online payment platforms. This will give you more flexibility and make it easier to send and receive payments.

Security: Make sure the provider has robust security measures in place to protect against fraud and other risks. Look for a provider that uses encryption and other security technologies to keep your financial information safe.

Analytics: Modern cross-border remittance solutions must be able to provide near-to real-time data on transactions and deal processing, so that both the parties involved can make more efficient decisions.

Customer support: Look for a provider that offers excellent customer support, in case you have any questions or issues with your account.

Reputation: Research the reputation of different providers to find a reputable and reliable company. Consider reading online reviews and seeking recommendations from other businesses or industry experts.



Grow your business

Using the services of a cross-border payments solution provider like Fable Fintech can help a company transition its cross-border payments operations quickly and futureproof its international remittance processes. Fable Fintech (Based in India, with global offices) provides white-label remittance solutions world-wide for many large-scale banks and offers B2B, B2C cross-border payment solutions for a variety of industries and sectors. An international payments SaaS for banks and businesses, Fable Fintech products include open banking APIs and Fx rate systems. Get in touch with a cross-border payment solutions team now!


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