Why global payments are about to get easier.
Let’s say you purchase something from an online retailer. You make payment, your order is confirmed and you get a tracking number. It’s easy, intuitive and fast. In our digital age, we’ve come to expect such immediate customer service.
Why should it be any different for businesses?
To date, the process for sending payment to a business in another country has been, well, painful. A payment often travels through a chain of intermediary banks, incurring fees in the process. It takes time, patience and trust to send a global payment – time most business owners don’t have to spare, with potential risks they don’t want to take. Fortunately, a shift in the payments landscape is going to change how – and how quickly – people send global business payments in the future.
Motivated by customer expectations, members of the global payments industry are eager to improve the experience in cross-border payment processing. Most significantly, payment providers and fintechs are developing global payment networks to increase the speed, security and efficiency with which payments are sent. Many banks are investing in new technology to help create efficiency and transparency.
For instance, Commerce Bank has been working with Visa® to help develop Visa B2B Connect, a new platform facilitating business-to-business global payments. Visa engaged financial institutions from around the world to establish a network of global payment processors. Using technology based on blockchain architecture, the platform helps participating banks process payments sent directly from another bank to another.
Blockchain is often referenced in connection to bitcoin currency but is a concept with other applications as well. It is a self-regulating technology that captures transaction information through a “chain” of records.
What it means for your business.
The opportunities afforded by emerging global payment networks could be useful for your business. Increased efficiency could mean more business or possibly the start of international trade for you. Participation in a global payments network will vary among banks, but here are the reasons you’ll want to ask your bank about how they’re approaching global payments:
- Shorter processing times.
In emerging payment networks like Visa B2B Connect, transactions are sent directly from one bank to another. Without intermediaries and additional steps in between, processing times are greatly reduced from several days to just one day. Because it’s going from one bank to another, it’s possible to understand the real-time status of payment as well.
Today, as intermediary banks move a global payment along to its destination, they may take fees for their service, and it’s hard to anticipate how much. As a result, many businesses increase the amount of money they send to try to anticipate added fees, but it can be hard to estimate how much to add. By the time it gets to the recipient it may be under the amount owed and cause problems with the order. Instead, a global payment has a set and expected fee, and both parties can plan accordingly.
In today’s system, a global payment may move through multiple banks. If there’s a problem, or a customer wants to understand what fees were taken out, it takes time to investigate the history of the transaction and identify the problem. Sending payment directly from one bank to another reduces unnecessary complexity.
In the case of Visa B2B Connect, a business is assigned an ID specific to the network. That number is used to identify transactions instead of the bank account number. If the account were to be compromised, the business’s bank account information would still be secure.
At Commerce, we’re excited about innovation that helps businesses grow sales. And as technology advances ease the global payments process – and bring global markets closer – you stand to export more of your products and services to waiting global customers. Follow up with your bank to understand what global payment solutions they may be exploring.
Commerce Bank is a member of the Visa B2B Connect pilot. To learn more about global payment services at Commerce, visit our website.
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