January 25, 2017
We’ve entered a new world for cross-border trade. Marketplaces are now opening their doors and creating opportunities for merchants to sell their goods to buyers worldwide. These are no longer just local marketplaces but instead international meeting points for sellers from various countries with buyers from totally different geographies. To be successful, marketplaces have understood their need to support merchants in many aspects, including WEB platforms for offering the goods, tools for customer reach and management of the sales experience. Some marketplaces even help with logistics, multilingual variances and the collection of funds in different currencies. Of course, with this development also comes the need to pay the growing base of merchants, bringing rapid and constant change to the world of payments.
Cross-border payments present merchants with a new dimension of challenges and concerns. One of the key issues is currency management and the ability for merchants to compare the pricing advertised to the buyer against the one they set, as well as ensuring that the marketplace sends the correct currency to the merchant’s account. Is this currency the same as the currency that eventually lands in the merchant’s local bank account? And most importantly – how much pain and effort is required to manage this complexity and how can a company control and reduce the costs of so many currency exchanges? The challenges are seemingly never ending.
How do merchants and retailers address these challenges? It’s a combination of using the right payment vendor and having the cooperation of the marketplace. FinTech companies are flattening the world – allowing marketplaces to initiate payments in their currency of choice to a merchant anywhere in the world, and for the merchant to receive it wherever they live, in their currency of choice, whether it be Chinese yuan, Indian rupee or any other of the hundreds of currencies around the globe.
For the payment provider, sending cross-border and multi-currency payments involves dealing with each countries’ regulations and limits, adhering to each countries’ bank accounts field requirements and having the capability to exchange in multiple currencies – all in a way that is timely and cost-effective for both the marketplace and the merchant.
Adding new routes on a daily basis and optimizing existing payment routes is also necessary and requires the technology layer to be flexible enough to connect with any type of bank or financial route. Another consideration is creating a technology that supports flexible language and country-specific setups which are seamless to both the payer and the receiver. Paying in a simple way, via APIs, and getting the payment quickly and costly is not the end of the road. Both marketplace and sellers expect extensive and effective reconciliation capabilities –via reports and APIs feeding directly into their system.
As a merchant becomes successful in a marketplace, the next step for the payment provider is to assist the seller in expanding to additional marketplaces who pay out in different currencies. The next challenge is then how to get paid from multiple platforms, in multiple currency balances or to multiple bank accounts, in a centralized, unified way.
Payments are a crucial cog in the huge wheel of taking a business global but it is no easy undertaking. On top of the regulatory side of international payments comes a strong technological consideration that must be resolved and constantly improved to meet the growing needs of merchants and marketplaces. Fortunately for them, FinTech companies are driving B2B payments forward, allowing the merchants and marketplaces to focus on what matters the most – the core of their businesses.