The problem is that cross-border payments are inherently complex, involving multiple parties, currencies, regulations, markets, risks and systems. On the other hand, commerce is increasingly global, whether a business is large or small.
Take e-commerce marketplaces, for example, which provide digital platforms to connect buyers with sellers around the world. Many of the big platforms act as intermediaries, collecting payment from buyers and transferring the amount to sellers, typically minus a fee.
From the seller’s point of view, they want their money quickly and with low fees. However due to the different banking systems around the world, e-commerce platforms are subject to different cross-border payment charges, meaning they have to either absorb the fees or recover them from their users. Then the amount of time it takes to transfer funds to sellers can vary depending where they are in the world.
These factors can have significant business implications, such as increasing the cost of items being sold on a platform, negatively affecting the loyalty of sellers to a particular platform, and even influencing the countries a company chooses to operate in.
Yet whilst the hurdles in cross-border payments are evident, creating a new system has not been straightforward.
According to Yoong, this is partly due to the difficulty of establishing global collaboration, and partly because the infrastructure of banks is highly complicated and takes time to adapt.
“Not only do incumbent providers need to overcome certain legacy challenges in their payment infrastructure, the legal and regulatory frameworks governing payment transactions vary across countries,” she explains.
Seeing an opportunity to improve the status quo, Visa, the international payment technology firm, is preparing to launch a new solution called Visa B2B Connect, a non-card platform based on distributed ledger technology, to facilitate cross-border B2B payments for its financial institution clients.*
“Commerce today has no geographic boundaries,” says Charlotte Le Gargasson, Senior Director, Visa B2B Connect, Asia Pacific, Visa Business Solutions. “Regardless of your business’s size or location, there is a world of growth opportunities to be found outside of your own market. Visa’s role as a payments network is to process payment transactions between banks on behalf of their buyers and sellers. Visa B2B Connect, which is readying for launch in 2019, is one way we’re enabling our bank clients to make that process easier for their corporate customers that need to make international payments.”