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The main challenges of international payments

1. Payment processing delays

Processing international payments is often exceptionally slower than domestic, sometimes taking up to five days rather than virtually instantaneous. This is largely due to the number of intermediaries involved, like correspondent banks, required to verify and clear the transaction before the funds can be successfully transferred. However, there are more factors at play, like Anti-Money Laundering (AML) and other fraud screening checks and errors in the payment information. This long processing chain and its traditionally manual nature increase the risk of delays. The speed that a cross-border payments platform can guarantee its customers can, therefore, greatly influence their buying decisions.

2. High fees

The multiple intermediaries often required to complete an international payment can add significant costs to the process, as they all charge individual fees for services. Regulatory costs and currency conversion charges can further erode the value of the transferred funds. Particularly in times of soaring inflation, getting a low price for cross-border payment services is a priority.

3. Legal issues

Cross-border payments are subject to many legal and regulatory requirements, which often vary from one country to another. This complexity can result in disputes and challenges, making issue resolution tortuous. Additionally, complying with international export controls, tax and data protection laws, reporting requirements, and other legal restrictions can pose significant hurdles by adding time and cost.

4. Security

The international nature of cross-border payments exposes them to multiple instances of security risk, including fraud, cyberattack, and identity theft. The involvement of multiple intermediaries and the transmission of sensitive financial information across borders make these transactions susceptible to breaches and unauthorised access, especially since different countries have different security standards. Breaches can be extremely costly, from recovering stolen funds to the ensuing reputational damage. Financial institutions and payment providers must implement robust security measures to protect against these threats, and customers will look out for trusted certification.

5. Lack of transparency

Beyond the obvious fees and charges incurred during cross-border payments, there are hidden costs that can impact both senders and recipients. These may include unfavourable exchange rates, which financial institutions sometimes leverage to generate additional revenue, and undisclosed fees from payment providers. This can inevitably lead to confusion and frustration for the customer, harming brand trust.

Source: Send Payments

A foreign exchange platform to address the challenges

Modular cross-border payments

While the idea of a smooth international payment process may seem almost impossible given the challenges, there are ways to mitigate their impact. One of these is implementing a modular payment solution to complete cross-border payments, which can be customised to the business’s specific needs.

For example, Australian company Send Payments offers a suite of different payment products through its API Platform, making it simple for developers to integrate only necessary features. Its modularity allows the business to streamline and automate various steps in the cross-border payment process, reducing the likelihood of errors that cause delays. By having a choice over the specific features and services that Send provides, businesses can strategically reduce their reliance on other costly software products. Additionally, the ability to integrate with existing infrastructure can help minimise costs associated with overhauling the payment processes in place.

Built-in compliance

Certain modular foreign exchange platforms offer ‘built-in’ compliance, helping to address the legal challenges of cross-border payments. Send handles adherence to KYC, AML and CTF regulations, as well as International Funds Transfer Instructions (IFTIs) and other types of regulatory reporting. By providing a comprehensive compliance framework, it minimises the risks related to financial misconduct and enhances the security and legitimacy of international transactions.

Bank-level security

The best modern solutions for cross-border payments will not compromise on security and match the standards of traditional banks. For Send, access to its systems is tightly controlled, and every action is meticulously audited, offering an additional layer of security and accountability. Furthermore, Send operates from ISO 27001 and PCI DSS-compliant AWS data centres, providing a trusted and secure environment for its operations. Data, whether at rest or in transit, is encrypted, ensuring that information remains confidential and shielded from unauthorised access. Every facet of its infrastructure is designed with the principle of least privilege, minimising vulnerabilities and enhancing the overall security posture.

Price transparency

Having access to a foreign exchange platform that discloses all associated costs is of paramount importance to businesses. Send’s solution actively addresses the challenge of hidden costs in cross-border payments by providing unparalleled transparency. By offering real-time exchange rates, forward contracts and a commitment to straightforward pricing, Send ensures customers have complete visibility into the actual costs of their transactions, reducing the risk of unexpected or undisclosed fees and the frustration that comes with them.

Businesses that provide cross-border payment services to their customers through Send have spoken about its positive impact on operational efficiency and customer experience. Rod Attrill, the CEO of Woolworths Team Bank, said: “Through our partnership with Send, we’ve enhanced our employer value proposition by providing transparent, innovative solutions to our loyal Woolworths team members and their families.”

BankVic – a prominent financial institution serving police, health and emergency services – has also recognised Send’s extensive expertise in international transactions. Anthony De Fazio, BankVic’s CEO, said its partnership with Send exhibits its commitment to user experience and ensuring its customers’ global transactions “are executed seamlessly and securely.”

Research has found that roughly 28 per cent of banking and fintech customers ranked the efficiency of cross-border payments as one of their top two key demands in 2022, while 56 per cent put the cost of payment processing in one of these positions. G20 countries like Australia have committed to help mitigate the challenges of international payments, working towards a 2027 roadmap that will make them cheaper, faster and more transparent. In addition, many new foreign exchange solutions are being developed as demand for a way around the challenges is only increasing. The cross-border e-commerce market is predicted to reach $52.7 trillion by 2027.

With such competition in the sector, businesses that offer customers the smoothest international payment services are poised to lead any industry. If you’re interested in learning more about how Send Payments can help your business overcome the challenges of cross-border transactions and maintain your competitive edge, speak to one of the expert team today.

The post The future of seamless cross-border payments: Navigating complexity in a changing financial landscape appeared first on Tech Wire Asia.

That being said, the process of sending international payments and converting currencies is not always straightforward, with one of the primary challenges being fluctuating exchange rates. The Australian dollar has been dropping gradually, but sudden rate shifts can lead to unexpected financial results.

Compliance with appropriate regulator requirements is also becoming an increasingly large source of headaches due to tightening international financial regulations and the heightened scrutiny of cross-border transactions. International money transfers require strict adherence to anti-money laundering (AML), counter-terrorist financing (CTF) and know-your-customer (KYC) regulations, and non-compliance can result in transaction delays, hefty fines, or even legal repercussions.

Many brands end up sending their customers elsewhere when it comes to providing for their foreign exchange (FX) needs, which can cause more problems than it solves. For one thing, it creates a clunky end-to-end experience for the customer as they navigate multiple providers and systems to complete their international transactions. The quality of those external services can also vary widely, and frustration can lead to a lack of trust in the brand, not its FOREX provider.

Another drawback of third-party FX services is the potential for added fees and costs. Customers may incur extra expenses due to less favourable exchange rates, undisclosed fees, or commissions imposed by these external providers or traditional banks. This not only increases the overall cost of the transactions but can also erode the perceived value of the brand’s offerings.

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However, there is another option. Businesses can use an in-house digital foreign exchange payment solution, like Send Payments who can be the brand behind your brand. Having a platform like this to hand means foreign payments can be integrated into standard operations, giving the brand more control over the offering and providing a more seamless customer experience.

Send’s solution in particular is modular, meaning it can be customised to the business’s specific needs. It offers a suite of payment products through its API Platform, making it simple for developers to integrate the necessary features that solve for their brand’s needs. Integration with existing infrastructure also minimises the time-to-value, allowing businesses to quickly adapt to the global market and provide a competitive edge. Alternatively, Send’s Corporate Offering allows globally ambitious businesses with multi-currency needs a solution to manage all their foreign exchange and payments requirements seamlessly in one place.

Send’s Corporate platform  provides more security when it comes to fluctuating exchange rates. Along with spot contracts, which allow customers to pay at the current market rate when they commit to purchase, users can also take advantage of forward contracts. These enable the customer to take advantage of current rates for a settlement date in the future. Send can offer fixed, forward window and NDFs depending on the customer’s specific risk management profile. It supports all major and minor currencies, with more being added all the time, and prides itself on its transparent pricing plan with no hidden fees.

Partnering with Send eliminates the need for businesses that offer a foreign exchange payment service to jump through hoops to satisfy regulatory requirements. The solution is built with real-time compliance, ensuring a risk-free transfer without anyone in-house having to lift a finger. Adherence to KYC, AML and CTF regulations, as well as International Funds Transfer Instructions (IFTIs) and other types of regulatory reporting are all handled by Send, leaving businesses free to focus on their core operations and customer satisfaction.

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Users can direct any concerns to their dedicated account manager who will guide them through the whole process and ensure the product works for their business goals. Send is regulated in Australia by ASIC and AUSTRAC and also holds an Australian Financial Services Licence (AFSL), so businesses can rely on the team’s expertise.

Companies that have entrusted their foreign exchange needs to Send include Qantas, Accenture, Flight Centre, Woolworths Team Bank and, most recently, BankVic. The latter – a prominent financial institution serving police, health and emergency services – recognised Send’s extensive expertise in international transactions. Anthony De Fazio, BankVic’s CEO, said that its partnership with Send exemplifies its commitment to user experience and ensuring its customers’ global transactions “are executed seamlessly and securely.”

Find out more about how Send can unlock new revenue streams and accelerate wallet share through an embedded payments solution at your company by speaking to one of the team today.

The post Bring your foreign exchange payments in-house and let your customers reap the rewards appeared first on Tech Wire Asia.