Cross-Border Payments – How technology is poised to transform an industry


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Cross-border payments are growing thanks to a mix of online businesses, borderless commerce, and global trade improvements. In addition to volumes, transfer asset types are growing too. Despite the slowdown in the cryptocurrency market, decentralised assets are increasingly offering fascinating use cases for wealth storage and transfer. Technology has driven this change, whether through APIs offering real-time FX rates or leveraging local clearing networks to avoid wire transfers. Given the role tech plays in the cross-border payment experience, examining these initiatives is a logical place to begin.

Technology continues to transform cross-border payments

For many years now technology and user demands have existed in a virtuous circle. Technology improves user experience (UX), and these improvements fuel further technological innovation. The rise of fintechs and neobanks is a good example of this situation.

These companies are reorienting consumer expectations around daily interactions, from quick onboarding to fully-digital payment experiences. APIs lie at the heart of this development. Open banking networks that integrate several service providers into a single network are simplifying bank infrastructure design.

On the institutional end, APIs are playing a critical role in offering treasurers real-time FX rates and the ability to hedge currency risk optimally. Vikas Srivastava, Chief Revenue Officer at Integral, notes that embedding FX services into customers’ workflows has helped deliver highly automated processes.

“The technology part, which has been driven a lot by the boom in fintech,” he continues, “has resulted in an evolution in user experience and put pressure on financial firms to serve their customers better but also made them question the way they handle cross-border payments.”

“The return of volatility has brought the focus back on cross-border payments as global e-commerce never slowed down, even in the pandemic,” he says. “Clued-up consumers are able to use the shifts in exchange rates to their advantage, by shopping globally and getting the most bang for their buck where their domestic currency is at its strongest.” However, volatility is a risk factor for companies who are at the receiving end of cross-border payments and don’t have sophisticated currency conversion technology at their fingertips. In those cases, increased volatility means higher currency risk and higher transaction costs due to wider spreads and ultimately that can have a huge impact on profitability.

Advances in technology are helping them mitigate these risks. Companies now have access to diversified settlement systems without absorbing significant technical overhead. Technologies like SWIFT GPI combined with API connectivity are playing a significant role in helping companies integrate their systems and boost visibility into cross-border transfers.

The cloud and APIs are a winning combination

Srivastava explains that the API-centric focus of Integral’s platform allows for significant customization – a critical factor that boosts UX. “A flexible solution that you can configure to fit your exact requirements and is able to integrate with other tools in your ecosystem is key,” he says. “Every business has its own set of tools and processes, and technology simply needs to fit in with that.” Leaning on the cloud to deliver these solutions makes a lot of sense. “Having access to state-of-the-art technology that you can deploy within weeks at a fixed subscription cost is hard to argue against,” Srivastava says.

Given these fast deployment times, payment companies and regional banks stand to gain significantly. Srivastava points out that the former can create rates and easily price multiple transaction types for their customers. “In addition, they can benefit from netting customer transaction amounts as that reduces costly spreads and enables them to ultimately maximise profitability,” he says.

“From a regional bank perspective, it’s about extending their product suite to meet their customer needs and providing them with products that make their offering stickier but with the same brand experience as their customers are used to. The objective is to grow your customer base whilst being able to monetize cross-border payments.” Srivastava continues.

Srivastava stresses the need for a tech provider to evolve. “The world is changing, as is technology, and therefore you need a trusted and proven partner like Integral, who not only is able to provide you with the technology of today but also tomorrow so that you’re able to future-proof your business,” he says.

The full article can be found on eForex where it was originally published.

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