Why X-Border Payments Should Be Like WhatsApp
At the best of times, getting paid is a challenge for any business, but in the case of cross-border transactions, the complexity often spans multiple levels.
It’s not just that international payments are notoriously slow and expensive. There are much bigger issues to address, including the lack of interoperability between the different local payment methods providers might want to use and a lack of transparency that makes reconciliation a major headache.
Businesses have struggled with such problems for years. But much more convenient payment methods have started to proliferate in the consumer world, and Money CEO of the collection Christophe Bourbier said he believes it is high time companies had similar solutions available to them. With the right tools, making a cross-border payment should be as easy as sending a peer-to-peer (P2P) message on WhatsApp.
“This is the problem we’re trying to solve,” Quagmire told PYMNTS’s Karen Webster in an interview. “We are trying to make SWIFT [compliance with Society for Worldwide Interbank Financial Telecommunications standards] and the job of intermediary banks easier, so that we can receive a B2C payment from PayPal or something, push money from country to country – in real time and in a very cost effective way.
See also: Cross-border complexity requires a new approach for global B2B markets
Quagmire makes it seem simple, but the reality is a little different. Thunes (formerly known as Limonetik) must get around a host of complex issues, including the fact that global payments still rely heavily on older rails such as SWIFT international transfers, as well as single payments space transfers. European (SEPA) in Europe. These are starting to show their age as they take too long to process, charge high fees at unfavorable exchange (FX) rates, and give the sender or receiver no visibility into where the item is. payment – or when it might pass. .
For a business that has to complete hundreds or even thousands of SWIFT or SEPA transactions each month, that could mean only receiving $ 980 on every $ 1,000 bill. Imagine the reconciliation problems this causes, Bourbier said.
“This merger, if you have a high volume of SWIFT transfers, it becomes a nightmare,” he said.
As if that weren’t enough, cross-border commercial payment solutions must be buyer-independent, Bourbier said. If a business buys parts from 50 or 100 different vendors, it’s unrealistic to expect them to use each vendor’s preferred payment method. This therefore means that any international payment platform must be interoperable with several types of new open bank payment rails, as well as with older formats like SWIFT.
Read also: Simplicity defines the success of cross-border B2B marketplaces
Thunes seeks to address these issues, first by creating local entities in each country where it hopes to do business. The idea is that having a local presence solves the complexity of local regulations, Bourbier said.
At the same time, Thunes is creating what Bourbier called “engines” that work well with existing payment rails in the various countries it serves. The idea is to be able to clear a payment with a specific fee and exchange rate for a given currency in one part of the world, and then send that payment to a recipient elsewhere in the world in the local currency in an affordable and transparent way. .
“It means creating a combination of SWIFT and bank rails and making those payments easier, as fast and smooth as a WhatsApp message,” Bourbier said. “When you send a WhatsApp message, you don’t think about the destination country. For the money, this is not the case.
To illustrate, Bourbier told Webster how one of Thunes’ biggest customers, the French shipping company CMA CGM, leases shipping container space to move product around the world. CMA CGM’s geographically dispersed customers all have their preferred payment methods and consistently wish to pay in their local currency. So it is largely up to CMA CGM to facilitate this.
See also: Limonetik, Nuvei Team on payment capabilities of EU suppliers
If CMA CGM has a Kenyan banana supplier looking to hire shipping containers, they will likely have to accept payments in Kenyan shillings, which is certainly not the easiest currency to use.
“So from CMA CGM’s point of view, he wants to receive a payment in euros, he wants to make sure that the cost is not extremely high, and he wants to know that the given exchange rate is what will actually be applied. “Quagmire said. “It can be difficult to understand FX because maybe these Kenyan shillings need to be converted to US dollars first and then to euros.”
Thunes eliminates this complexity by streamlining and streamlining these payments, regardless of how buyers pay. For any business that has to accept regular cross-border transactions, such efficiency could be invaluable.
“Businesses just want payments to be as easy as a credit card transaction,” Bourbier said. “They want to allow customers to pay the way they want, they want to receive their money instantly, and they want it all to be done through one. [application programming interface (APL)]. One API, one back office – and they can be paid for anywhere in the world, without local constraints.