Cross-border payments: Why are they so complicated?
The need for smooth international payment solutions is high. Companies want to streamline their international transactions. They also need fast and affordable cross-border payment methods. So what’s the solution? Find out everything you need to know here.
In our eBook, you’ll find the best ways to navigate cross-border payments. It covers:
- The current state of the banking industry and its shortcomings
- The challenges faced by smaller companies in international transactions
- Solutions to accelerate and simplify cross-border payments
Banking: The state of the industry
We all know the banking industry falls short when it comes to facilitating efficient cross-border transactions. They’ve been around the block for years, but perfection is definitely not their forte. Banks are often slow to respond to changes in regulations and technology, meaning that processes for international transactions can be outdated or inefficient.
Sending international payments through banks may undergo several hops before reaching its final destination. And this can lead to delays in payments and higher costs.
Manual processes and high fees
One of the biggest headaches of cross-border payments is that the process often involves tedious manual work. Tracking this can prove both demanding and time-intensive. It can, therefore, result in delayed payments.
Moreover, banking institutions or third-party firms often impose high costs for international transfers. This makes them financially unviable for small businesses that lack the resources to pay such expenses.
Cross-border payments may take 3-5 business days to arrive at their destination, which can be a major impediment for businesses seeking rapid payments.
Exchange rates are often a mystery
Banks tend to favor their own exchange rates, which may be less favorable than real-time market rates. As a result, there is an additional cost for the sender or receiver of the payment.
There’s also no transparency regarding the exchange rates used by banks. This can leave senders and receivers in the dark about how much money is being converted.
However, SWIFT has innovated the Global Payments Initiative (GPI) to address opacity in global payments, making them more traceable.
SWIFT doesn’t help reduce costs
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a revolutionary messaging platform. It enables financial institutions from across the globe to securely send and receive payments.
Initially created to guarantee safe and steadfast cross-border payments, this platform unfortunately fails to lower the expenses associated with international transactions. In fact, some banks may even charge additional fees for using SWIFT. These can add up over time for businesses that rely on international payments.
Challenges of cross border payments: Solutions needed for smaller companies
Using the conventional financial infrastructure, cross-border payments can be slow, expensive, and inefficient. Smaller companies with limited resources are especially impacted by such challenges. They lack the scale to negotiate better rates or absorb high fees associated with international payments.
Most B2B payments start and end at banks, often making several stops along the way, which can add up in terms of cost and time. This is problematic for businesses that rely on swift and easy international payments.
A need to accelerate and simplify
The challenges smaller companies face with cross-border payments hinder their growth and potential. They emphasize the dire need for innovative solutions to accelerate and simplify these transactions.
Payoneer’s ebook highlights the urgent necessity of streamlining the process. In it, you’ll find tailored solutions that cater to the needs of individuals and smaller businesses.
The banking sector is gradually embracing fintech through the incorporation of Application Programming Interfaces (APIs), allowing fintech companies to coordinate with banks and streamline payments. This revolutionary technology has the potential to transform global payments. However, there are still issues that should be addressed before becoming a widespread phenomenon.
Some banks are also offering personal financial management software that can automatically convert currencies, providing transparency into exchange rates and fees. This is a commendable initiative, but there are still measures needed to make international payments more effortless, affordable, and accessible for businesses of all sizes.
Payoneer has the solution – a global payment platform that enables businesses of all sizes to send and receive payments to over 200 countries in over 150 currencies without interacting with the banking infrastructure.
Embrace transparency, reduced costs, and simplified processes with Payoneer. Download the eBook and be part of the change that international transactions so desperately need.
Don’t be left behind – join the revolution and experience the relief of streamlined cross-border payments. Download your exclusive eBook by submitting your email address today.
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