October 8, 2016
Nearly half (46%) of respondents expect to increase international payments in 2016, with 29% planning to upgrade to deploy automated systems
LOS ANGELES – October 4, 2016 — AFEX, one of the world’s largest non-bank providers of global payment and risk management solutions, today announced the results of its inaugural State of International Payments Report, finding that nearly half (46%) of North American companies involved with international commerce expect to utilize international payments more this year than in 2015. As a result, nearly one in three North American companies (29%) are planning to start using or plan to upgrade their online automated international payments tools in the next 12 months to increase operational efficiency, mitigate risk and reduce costs.
AFEX’s first annual State of International Payments Report, which polled more than 500 financial decision makers at SMEs and corporations from across the globe who engage in an estimated $230 million worth of international transactions per month, reveals that despite uncertainty in global markets, these firms anticipate faster growth in international markets than domestic.
Online marketplaces, such as eBay and Amazon, have brought international commerce within reach of smaller businesses, while mobile payments have opened up access to previously untapped and unbanked markets. Against this backdrop, 46% of the North American firms surveyed expect to increase their international payments this year, while only 24% expect to see a commensurate rise in domestic payments.
This greater weighting given to international payments brings with it greater complexity, with FX volatility (37%), cost (37%) and contending with different banking and payment systems (26%) all high on the list of challenges.
The data supports the findings in a report* from the McKinsey Global Institute, which asserts that almost all cross-border commerce now entails a digital component. Increased data flow, expected to rise nine-fold over the next several years according to the report, will enable more rapid movement of goods, services and financial transactions.
As globalization continues to intensify, North American businesses seeking to increase their exposure to international markets are presented with a new set of challenges when handling higher volumes of more complex international payments, said AFEX Chief Executive Officer, Jan Vlietstra. As firms scale their business overseas, they need to be cognizant of currency exchange risks and the associated costs and the complexities involved when dealing with different banking systems. Automated payments solutions, coupled with currency exchange, FX products and expert advice, can mitigate the risks inherent in each of these challenges.
In response to the anticipated increase in international payment volumes and to drive operational efficiencies, 29% of the North American firms surveyed plan to introduce or enhance their automated payment technologies. Over half (52%) of these said reducing the amount of time they spend processing payments was a key reason for turning to automation, with 43% seeking the ability to make and receive payments in real-time. Over a quarter of respondents (27%) are adopting automated payments technologies to drive down the costs associated with making international payments.
In addition to mitigating risk, many firms are turning to automated payment systems to reap the benefits of operational efficiencies, noted Christian Spaltenstein, General Manager of the Americas at AFEX. Increasing globalization means greater competition and payments is one obvious area where firms can cut costs, improve service and manage their exposure to international markets more effectively.
Over the last 12 months, nearly a quarter (24%) of those North American businesses surveyed have experienced FX volatility when making or receiving international payments and a similar proportion (22%) experienced a delay in receiving payment. Around one in 10 (9%) had an international payment fail or get lost while transferring, while 5% experienced fraudulent activity.
Of those that experienced issues when transacting business internationally, one in five (22%) saw their profitability hit while 4% lost business as a result.
* McKinsey Global Institute, Digital Globalization: The New Era of Global Flows, February 2016
About the survey:
AFEX polled clients based in the United States, Canada, the United Kingdom and Australia, and across a wide range of industries, to determine their perspectives on payments. The survey was conducted from Thursday, July 28, through Friday, August 12, with 513 respondents in total and 186 from North America. Please visit www.afex.com/docs/AFEX_State_of_International_Payments_2016.pdf to view the full results.