Cross-Border Payments: The Fliqpay Phenomenon.
Miracles do happen in this part of the world. The emergence of Fliqpay with their cross-border payment options have helped in a large way to reinforce this submission. Payments from Nigeria to the UK and even as far as Australia is possible by every sound of it. This was not possible just few years ago. This is definitely a very good time to bank and at an unprecedented convenience. Cross-border payments are as old as money. There has been a need to transfer money from one country to another since currency was invented. It was difficult to transfer goods from one country to another during the trade-by-barter regime and one can only wonder how the world has moved on from that time. Cross-border payments have come to stay in a world that has changed a lot since the barter era.
History of Cross-Border Payments
AZA streamlines the history of Cross-Border Payments quite exhaustively by leaving no stone unturned by highlighting the history of cross-country payments from barter to the most recent wire transfer. According to AZA:
The history of cross-border payments goes hand-in-hand with the history of money, industrialization, and globalization. These payments include remittances by migrants to people back home and businesses that have expanded across the globe, necessitating fund transfers between entities and suppliers.
The need to exchange goods has existed from the early days of long-distance trade. People travelled long distances to exchange precious stones, spices and fabric. This exchange in value can be seen as the beginning of cross-border transfers as people moved value physically across many borders.
The Rise of Coins and Currencies
Eventually, precious metals were converted into rudimentary coins which could be exchanged as value for goods and services. In the 8th century, the hawala system took shape. In this system, money did not move physically but instead relied on a trust system of money brokers in different countries. Todate, the hawala system is still a popular way to send money back home especially within the Islamic community.
The exchange of currencies was an automatic result of different coins/currencies made in cities and countries. As far back as biblical times, money changers existed in markets to convert foreign currencies back to local currencies to enable the purchase of goods and services in that particular market. This still relied on the physical movement of the currencies.
Banking and Wire Transfers
The need to transfer funds between places that were very far from each other arose with industrialization. In the late 19th century, Western Union, formerly a telegraph company, began facilitating money transfer through “wiring” to another location. A sender would pay money in one office for the operator to send a message and “wire” the money to be collected by the recipient in another office location. Today, many remittance companies have millions of agents around the world where recipients pick up cash sent to them.
Shortly after this, banks adopted the wire method to telegraphically transfer funds from one location to another, giving rise to EFT (Electronic Funds Transfer). To this day, you can still see this as an option in your banking app when you need to move money locally.
Eventually banks adopted the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network in which international payments would be relayed securely. One noticeable characteristic of all these modes of money transfer up to this point is the length of time it takes for the recipient to receive funds. It can take days or even weeks.
The era where you had to wait for days for money to hit a recipient’s account is long gone. Innovations have sprung up around the world to ease the speed and cost of making cross-border payments. Mobile money has ensured that people around Africa receive instant payments from family abroad through apps like Sendwave which is a hit among the Kenyan diaspora in the US. APIs have created an interconnected network of payment systems that deliver instant bank settlements in many countries. In the near future, blockchain technologies are bound to revolutionize the entire industry.
Benefits of Cross-Border Payments
The benefits of cross-border payments as discussed by Fliqpay. It states as follows:
Merchants are often worried about the expense and time involved in receiving cross-border payments, and navigating a variety of different regions to complete a transaction can seem like a complicated process. Therefore, it is important that merchants partner with a reliable and secure cross-border payment service provider to help mitigate these pain points. But also ensuring that they partner with a provider that has the best transactions and foreign exchange (FX) fees.
Here are 3 benefits of a cross-border payment gateway to expand your business you need to consider;
Offer multiple regional payment options to your customers
Irrespective of the territories in which you choose to operate, a cross-border payment gateway for your operations will enable you to accept payments from your customers in their local currencies and seamlessly settle in your preferred currency in real time. This will ensure you expand across borders and emerging markets.
It is important to note that it is worth exploring and understanding which payment methods are prevalent in these territories to ensure that your customer enjoys a good experience.
Make bulk payouts
This involves paying out to multiple payees such as suppliers, vendors or sub-merchants located in multiple countries on a regularly, thereby enjoying the benefits of a certain and consistent foreign exchange rates as well as faster payment time. An efficient cross-border payment gateway will enable you to automate highly scalable payments in multiple currencies, payment methods and to multiple countries.
Improve payment security
Leveraging a cross-border payment gateway can be impactful to your business by providing enhanced security as you move funds from one territory to another.. Payment security can make or break customer trust in your business. By integrating with a secure payment provider, you’ll enjoy the benefits of multi-factor security and financial regulation. You can be sure that customer data is properly maintained and protected at all times
Challengers and Solutions Connected With Cross-Border Payments
Mobile App Daily could not have highlighted the challenges and solutions of Cross-Border payments better.:
Major Challenges Of Cross-Border Payments
Here are some of the major challenges that are faced in cross-border payments:
1. Outdated operational systems
One of the biggest challenges banks face nowadays comes in the form of their messaging infrastructure. The largest number of cross-border payments are processed with the help of SWIFT MT103 messaging format, which is, putting it simply, a highly-reliable but rather limited in terms of the amount of information it can carry.
If you require some sort of additional information, it will usually be sent to you by an MT199 message system. And anything above the amount of MT103 and MT199 is will usually receive via email.
So, manual processing and non-automated messaging on both sides of the transaction are mainly what are causing major operational inefficiencies for banks. All of the time consumed on regulating those inefficiencies could have been spent on improving-value activities instead.
2. Slow payment processing
You probably already know that your payments can be stopped at any point in this long and complicated payment path. This results in both delays and unsatisfied customer experience for both parties involved.
The most common reasons for delays include incomplete payment information, AML checks and fraud, and the need for sanctions conduct. Due to the serious lack of digitalization and standardization in the sharing of this information your checks usually need to go through many channels of complex communication.
This often happens to be manually intensive, only leading to further delays. If the case is simple, your payment can be held for several hours, but if the situation is seriously difficult, your payment can be stuck in the system for weeks.
3. Personal data privacy regulations
Various regulations on what information can or cannot be shared, not mentioning the reading interpretations of those regulations only further complicate an already complex cross-boarding process.
Banks need to closely follow those regulations, investing a lot of their time trying to organize what information can be transferred across different jurisdictions. Take Pakistan for example: in this country, banks are not allowed to share any personal or business information of their clients, even within different departments of the same bank.
Try to think of a technology solution that can help you in resolving this situation, and you will immediately become a millionaire.
And do not also forget about the recent General Data Protection Regulation (GDPR) that will affect any organization that is processing personal information of the citizens of the European Union.
There is no doubt that it will have significant implications and restrictions on what information can and cannot be shared, which will only further complicate any transaction process.
Key Solutions For Cross-Border Payments
Below are some of the key solutions for cross-border payments, which are as follows:
1. Understand the preferences of your customer
When sending out an invoice you should be taking into consideration all of your customers’ potential preferences, whether it’s the currency they prefer to be billed or simply the language on which they will be receiving the invoice.
Take countries like Malaysia and China, for example, two countries where the local currency is being heavily regulated by the government. In these countries, most of the clients will be happy to receive the invoice in US dollars.
But in most of the other countries, clients will most likely prefer to get billing in their home currency, whether its euro, rubles, or any other currency type out there. Because if you bill your customer in US dollars, they need to pay you in US dollars, which can prove to be a complicated task like integrating blockchain technology for some countries and regions.
By giving your customers the choice of paying in their own native currency will save them a great deal of time since they will not have to deal with complex bank wire information or expensive foreign exchange fees and rates.
2. Present them with options
We think of credit cards as the fastest and most convenient way to pay, but it also can be a rather expensive one. Outside of the United States, Visa and Mastercard are undoubtedly the dominant force in the payment field. Whereas in China, for example, most businesses, as well as consumers, tend to prefer UnionPay, which is the most heavily dominated credit card on the market.
As for the larger payments, bank wires usually come as the best choice, but they are also a little bit complicated since you want to provide your customer with proper banking codes and details.
It is also a common theme with bank wires to have somewhat confusing foreign exchange rates and fees, which can sometimes cause the initial payment amount to become less when it comes to the biller. But no matter what option you think will be best for your customer, always lay down at least some of them before him – because every customer wants and should have them.
3. Surpass their expectations
Going back to the beginning of the article, cross-border payments are undoubtedly complex. This does not mean, however, that your customers will not be expecting the same type of seamless experience they have with their domestic purchases.
Businesses that will understand all of the complexity of cross-border payments matter better, and will easily win top positions on any customer preference list.
With Fliqpay, every customer is guaranteed everything the kingdom offers in all connected with Cross-Border payments and other payments requiring wire transfers. A secure and reliable payment platform ensures that financial transactions are carried out in the most convenient of situations. When this happens, businesses and organizations can payments across borders seamlessly and this is exactly what Fliqpay offers .