Trade has become more global than ever, but paying suppliers abroad remains a challenge for businesses looking to make payments in less familiar currencies belonging to emerging economies in Africa, Asia and the Middle East, for example.
That logistical challenge is what London-based VertoFX has been trying to solve since 2019 through its B2B currency exchange marketplace, which is geared toward helping small- to medium-sized businesses (SMBs) in emerging markets, and Africa in particular, make payments across multiple currencies, while minimizing foreign exchange (FX) volatility.
Last year, the B2B cross-border payments provider developed a multicurrency wallet product, which allows SMB clients to convert money from one currency to any of the other 30-plus currencies Verto has on its platform and hold the new currency in their wallet until they are ready to make a payment.
Read more: From Currency Convertibility to Cross-Border Payments in Emerging Markets
This means a client in the U.K. who needs to make a future payment to three other businesses in South Africa, Kenya and the U.S. can easily convert their British pounds to each of three local currencies and hold the funds in a virtual wallet until they are ready to issue the payment.
“That way I remove FX rates risk because I’m able to know right now what the rate is to convert into [South African] rand, Kenyan shillings and U.S. dollars,” VertoFX Co-Founder and CEO Ola Oyetayo told PYMNTS in an interview, adding that the ability to remove price and rate uncertainty is why the feature has been very popular with its SMB clients.
But Oyetayo said merchants also want to collect payments from businesses in other countries, a need that Verto is addressing with a new multicurrency solution provided in partnership with Luxembourg-based financial infrastructure provider Banking Circle.
See more: Verto, Banking Circle Partner on International Payments
The deal, announced earlier this month, will enable the B2B cross-border payment provider to streamline international payments for clients using the Banking Circle Virtual International Bank Account Numbers (IBAN) solution. This will enable Verto to issue specific IBANs for accounts and payments in their client’s name, simplifying reconciliation and increasing client confidence in the process.
For merchants, these global bank accounts will enable them to make and accept cross-border payments in multiple currencies in a way that would be difficult to do with traditional banking systems.
Leveraging access to Banking Circle’s local payment rails will also allow Verto to bypass the expensive and slow traditional banking network to deliver payments without the need of a physical presence.
“It creates the ability for us to issue our business customers multicurrency accounts, which means … I can basically say I’ve sold you these goods in dollars, you can make the payment into my dollar account which Verto hosts,” Oyetayo explained, adding that having these multicurrency capabilities has brought the company’s wallet product — used by about 45% of businesses on the B2B marketplace — to life.
See also: The B2B Marketplace Fix for FX in Emerging Markets
An Ideal Verto World
Oyetayo said in an ideal world, the company would like to create a closed ecosystem where wallet-to-wallet transfers can take place between businesses using the Verto platform.
That means a U.K. company that wants to pay a supplier in Kenya, for example, could directly transfer the funds from their Kenyan shillings wallet to the supplier’s Kenyan shillings wallet, eliminating the multitude of intermediaries involved in the correspondent banking network, he explained.
“Our view of the world is that at some stage, we’ll have a world where every business is on Verto for specific corridors, and they’re using our wallets to send and receive money [instantly],” he said.
But in the meantime, the B2B payments firm has started beta testing its application programming interface (API) to give businesses and FinTechs in corridors such as Africa — “one of the most expensive corridors to send money in the world” — access to the infrastructure and banking relationships that Verto has built over time, he said.
“What we want to do is to enable tech-savvy businesses to integrate with us via an API, and then we [can] power their cross-border payment needs,” Oyetayo said, adding Verto’s regulatory license from the U.K.’s Financial Conduct Authority (FCA) will facilitate that process.
To further keep up with the times, the London-based company launched an app to enable cross-border payments via mobile and is preparing to launch a card product next year that businesses can link to their wallet to make payments online.
Part of the $10 million the firm raised in September has also gone into recruiting “world-class talent,” like Chief Operating Officer Tim Rudman, who previously worked at U.K.-based international money transfer and payments business WorldFirst and came to Verto with extensive experience in the emerging markets payments space.
Read more: B2B Payments Platform Verto Raises $10M
When it comes to remittances, Oyetayo said Verto is working on a liquidity proposition for smaller players who often can’t pay out instantly due to a lack of float in the currency that they’re delivering into.
“You could almost call it a buy now, pay later product [through which] Verto provides liquidity in [various] currencies to these smaller remittance players, which allows them to compete with larger firms that maybe have a credit line with a local bank,” he said.