The Rise of B2B Cross-Border Payments

This industry insight article was provided by an external source.

It may be a small world, but the flow of money moving round it is enormous. Over the past few decades, the increasing international mobility of goods and services has contributed to an ever-growing volume of business to business (B2B) cross-border payments, while the value of all funds crossing international frontiers is set to grow from $170 trillion in 2017 to a projected $270 trillion by 2027.

For businesses and organisations involved in international trade, paying overseas suppliers and getting paid by foreign clients swiftly, securely and transparently is critical to business success. However, many businesses still rely on the creaking methodology and weak technology of a legacy banking network that struggles to process trillions of dollars worth in international payments quickly, safely and inexpensively. Businesses that wish to protect their overseas markets or expand their international trade, must innovate their payments processes internally, or in concert with a technologically advanced fintech provider. Read on to discover more about the rise of cross-border B2B payments and what your business needs to do to stay ahead.

What are B2B Cross-Border Payments?

B2B cross-border payments are commercial financial transactions where the sender and the recipient are based in separate countries. Cross-border payments cover both wholesale and retail payments, including remittances, and the transactions can be between individuals, companies, or banking institutions who are looking to transfer funds across territories.

What has Caused the Rise in B2B Cross-Border Payments?

According to the WTO, the volume of world trade has grown by 4300% since 1950 and its monetary value has increased 347 fold. Together with the arrival of new, tech-heavy fintech providers who have made sending funds abroad faster, cheaper, simpler and with less risk than ever before, the massive expansion in world trade has created a correspondent rise in B2B international payments.

Steps to Increase B2B Cross-Border Payments

For B2B organisations seeking to expand their international trade, increasing the value, volume and diversity of their cross-border payments is essential. Here are the three key steps they must apply:

Step 1: Diversification

Many B2B organisations rely on traditional banking methods for cross-border commerce. However, the wire transfers, ACH (Automated Clearing House network) payments, and regional bank transfers typically provided by traditional financial institutions require human input which makes them slow, more expensive to facilitate, more prone to error, and their business’ proposition less attractive to new clients and suppliers. Expanding the range of payments methods to incorporate credit cards and additional digital solutions such as digital wallets (e-wallets) and visual cards can speed up payments, reduce costs, and eliminate human error whilst simultaneously removing hurdles to trade.

Step 2: Adopt B2C and C2C Payment Methods

Over the last ten years, the financial services industry has made great progress in terms of cross-border payments, especially at the B2C (business-to-consumer) and C2C (consumer-to-consumer) level, where APIs and embedded finance make purchasing products and services from abroad easy for consumers. However, the B2B segment has lagged behind, due to several issues that concern legacy systems and a need to keep up with a changing regulatory environment.

Businesses seeking to increase their B2B cross-border payments must offer payment services that are as easy to use and seamless as their B2C and C2C cousins. This means providing payment options that are adaptable to employees and customers and have all the backend processes automated and invisible. Additionally, all payment services should be integrated into the cloud to avoid big jumps from one platform to another and to make everything cohesive. The Internet of Things (IoT), blockchain, tokenization, and other technologies will also push the boundaries of payments in the future. B2B organisations must stay ahead of the technology curve and adapt their payment services accordingly.

Step 3: Automate, Automate, Automate

Digital solutions that employ automation technology for payments processing such as Accounts Receivable Automation offer a clear advantage in cross-border payment systems as they need no human intervention, and they provide faster transaction completion. Embedding automated technological solutions that make use of AI, RPA (Robotic Process Automation), machine learning, and other smart technologies into their payment solutions is the most effective way for businesses to overcome the current and future challenges of the B2B cross-border payments environment.

Win Some, Don’t Lose Some

Over the coming years, winners and losers in the arena of international trade will be decided by the strength of their technology and the management of their cross-border payments. Clients and suppliers will gravitate towards speed, simplicity, security and transparency. Businesses who innovate and adopt new payment processes early will gain a clear advantage over their competitors, protect cash flow, increase profitability, and position themselves into taking an ever-larger market share.

Clear Treasury for Innovation, Clarity, Speed and Security

Clear Treasury’s mission is to take the complexity out of making international payments. To learn more about our services and to find out how we transparently assist businesses engaged in cross-border commerce, get in touch today.