Huge, Non-Glam, Less-Talked-About Segment in FinServ: Cross-Border Corporate Payments

September 9, 2018


The inefficiency and myriad of other issues with cross-border corporate payments have baffled me for long as a serial entrepreneur. The lack of transparency is astonishing, especially if you are a small business. There is little clarity on the FX rates and transfer fees charged by banks and MTOs. The current process makes it difficult for the sender to check the status of money transfer at any given time. While large corporates have been able to negotiate better terms and tend to be well-served by existing solutions, SMEs find themselves in a position where they are limited in finding the best solutions and have to deal with expensive terms for their cross-border transfers.

The process of making cross-border payments is complex with the involvement of multiple intermediaries with multiple payment systems and regulatory norms. This makes the money transfer process complex, and unpredictable, as it takes a long time to clear funds, which slows down the receipt of invoices and the opportunity to get early payment discounts.

It amazes me how so many startup founders/innovators in FinTech are mostly focused on glamorous segments such as neo-banks, p2p payments, retail payments, and digital lending. That is why I have long admired the company Scott Galit built over the years. It grew at a fast pace in the cross-border corporate payments space and expanded even further. We at MEDICI have been tracking this company called Payoneer since 2014/15 and wrote about this segment quite a bit since then.


Over the years, increasingly global, interconnected economies have revolutionized the way business is done across the globe. Sellers have been used to apps like Venmo and PayPal for their consumer payments, and have begun to expect the same level of ease-of-use and low cost, high-speed payments for their business transactions as well.


The growth of SMEs and their increasing contribution to global trade is the biggest driver of cross-border corporate payments. This, coupled with the evolution of internet/mobile economy, has opened up great opportunities for consumers and businesses alike. Where consumers have abundant choices in their purchase of goods and services, businesses have found a way to capture a customer base outside the national boundaries, thus increasing the share of cross-border money transfer.

The segment, dominated by banks, is witnessing the emergence of a number of exciting FinTech players, revolutionizing the market with their innovative approach and solutions. The spectrum of cross-border corporate payments can be classified into sub-segments based on the entities involved in the send and receive side. The corporate payment landscape is broadly categorized into the following three categories, depending upon the sending and receiving entities:

B2B Payments

  • The send, as well as receive side entities, are businesses and SMEs

  • Major use cases include vendor-supplier payments, outsourcing, and trade payments.

  • This segment is the biggest contributor to the global cross-border\ payments volume

C2B Payments

  • Retail cross-border payments, or C2B, are the ones where a customer is making an international payment to a business.

  • The most evident use case is of cross-border e-commerce and brick-and-mortar online sales.

B2C Payments

  • Major use cases include cross-border employee/freelancer payroll, benefits, and pension payments.

  • The rise of the freelance economy and global workforce is driving the growth of B2C payments.

I am focusing on B2B payments today in this article. B2B Payments is the largest segment in cross-border corporate payments with the transaction value of $21tn plus on a yearly basis (yes $ trillion). There are banks, established remittance companies, and few FinTechs that play in this market.


Earlier in this article, I talked about Payoneer and what a great company it is. The vision of Payoneer founders to foresee the great opportunities in the B2B payments and a massive market that it is, and building a very promising execution machine to go after the opportunity. So let’s understand what is it about this market that Payoneer saw and what makes it so important and worthy of an Inner Circle article.

Drivers of B2B payments market:

  • The rise of international trade and globalization of businesses has resulted in the sustained growth of B2B payments by volume. This segment majorly consists of international trade (export/import) of merchandise and commercial services.

  • Growth in small and medium-sized enterprises (SMEs), which are trading more across borders. SMEs now represent 25% of international trade in the B2B segment. In UK SMEs account for 47% of trade revenue.

  • Since SMEs primarily deal with low value, high volume transactions, the value growth of B2B has slowed down, whereas the volume growth has been significantly high. The slow value growth of B2B payments can also be attributed to the volatile commodity prices in the global market.

  • Globally the US and UK dominate the B2B market, collectively representing almost 40% of international trade (including intra-EU trade). APAC region is coming up in terms of B2B payments with almost 20% contribution to international trade.

The way forward

The most important use case of corporate payments is Vendor-Supplier Payments (B2B) with target customer being SMEs and large corporates. With the number of SMEs growing at a high rate across the globe, for most of the modern FinTech players, SMEs are growing as a key target segment. In the UK, 99% of businesses are SMEs. At the same time, SMEs are heavily underserved by the current banking system for the cross-border payments. In the UK, SMEs pay ~$5.8bn annually in a hidden transfer fee. A major roadblock for SMEs in their international trade is lack of a global account infrastructure that they can access quickly and cost-effectively. They also need to manage multiple banking and supplier relationships. Merchants now are looking for one partner for all their banking needs, locally and internationally. This will enable them to save time and resources. The most crucial value propositions for this use case are:

  • Low cost, money transfers high speed

  • Delivery methods (e-invoicing, pre-pay, post-pay, factoring, etc.)

  • Value-added services (assured FX, batch payments, forward contracts)

FinTechs are playing a major role in defining and refining some of these crucial value propositions. Sometimes going way beyond those and offering amazingly better experiences. The image below showcases some of the players.


My story and supporting arguments/data indicates that the B2B vendor supplier payments is a highly potent use case and solving the problems of SMEs presents lucrative business opportunities for B2B payment service providers.

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