Do built-in costly time delays, high transfer fees, foreign exchange fluctuations, and high risks of fraud sound familiar?
Thankfully, when transacting with global partners and vendors, you now have options, making conventional payment systems a thing of the past. This is hugely important in today’s fast-paced markets, where payment efficiency and accuracy are a foundation for your financial success. Technologies are helping businesses transact instantaneously and virtually risk-free – especially when helping them gain a competitive edge.
And they are doing this by reducing friction.
There are three critical friction points that every business must address to enable safe, transparent, and efficient payments.
Common friction points in cross-border payments
Time
Delayed payments often act as an operations bottleneck when dealing with international clients, partners, and vendors. Unlike domestic payments that usually just involve one or two local banks, international payments are more complex. They are conventionally routed through multiple banks and third-party payment service providers, often operating in different time zones, with different back-end systems, and in different currencies.
The involvement of multiple players in the transaction supply chain results in inevitable time delays that can agitate suppliers, slow down operations, and lead to poor cash flow management.
Costs
Every bank and third-party payment service provider charges transfer fees or takes commissions to move the money along. This results in added costs that lower the funds that reach the party on the other end. And let’s not forget the extra fees that are also charged if the payment fails for some reason.
These costs add up. Sometimes, they can even halt the payment process. And in difficult circumstances, they can lead to damaging miscommunication between parties.
Risk
International payments are subject to a greater risk of fraud and are, therefore, under increased regulatory and system scrutiny. Payments suspected of being fraudulent or involved in money laundering are flagged by the system, and all parties have to get involved in providing additional information.
Achieving a frictionless payments process
Manually initiating, tracking, reconciling, and reporting all transactions is slow, inefficient, and prone to error. The more efficient and easier way to conduct international payments is to switch to an integrated payments system.
Several tech-enabled payment platforms have automated the payment initiation, tracking, and reconciliation processes – routing money through the minimal number of banks and third-party services. You are presented with a centralized view of all their transactions, where payments are validated at the end of the financial supply chain.
Here are four ways in which you can save time, get host-to-host connectivity, avoid excessive costs, and reduce the risks of fraud by using a centralized payments platform:
1. Automating compliance
Fintechs and payment platforms offer compliance support, automatically flagging potentially risky payments beforehand, prompting the sender to validate the recipient’s information.
Speedy prevention and strong AML defense procedures reduce your risk of fraud.
2. Automating the error-solution process
Even with automated payments, human errors such as data-entry mistakes are still likely to occur.
At Axletree, for example, we equip our centralized payment platforms with API integration. The platform enables clients to automate some of the decision-making involved in rectifying these errors to resume the real-time payment rails process as quickly as possible.
You avoid costly time delays and ensure efficient transactions.
3. Unlocking end-to-end visibility
Payment platforms are capitalizing on the market’s need for end-to-end, cross-border payment visibility. They are offering tech-enabled rails payment solutions that allow you to track your money across borders and banks from initiation to completion, giving you a clear insight into the transfer route, involved counterparties, and fees being charged along the way.
Full visibility saves you time and helps you avoid or prepare for any incoming fees.
4. Self-service onboarding
A centralized payments and receivables platform removes friction from the international payments process by offering you enterprise integration and a self-service onboarding portal. Both parties in the transaction can enter their data in the required format, providing the system with the ability to raise red flags when the data has been entered incorrectly.
You save considerable time.
Axletree enabling frictionless payments
Axletree is leading the payment solutions space. Working with leading fintechs to ensure the frictionless movement of money worldwide, we’re helping build the digital infrastructure required to create new, safe, efficient, and reliable payment rails.
To learn more about our financial messaging solution, Symmetree, click here. It is the perfect tool for unlocking transactional visibility and ensuring efficient financial message processing for financial and non-financial institutions alike.
Get in touch with us to find out how we can help you drastically reduce friction in international payments.
May 31, 2022
