US Multinational Businesses Wait 53% Longer to Receive Cross-Border Payments Than Domestic Payments

Global eCommerce activity has surged over the past year, presenting prime growth opportunities for enterprises. These opportunities come with several challenges, however. Enterprises must meet cross-border shoppers’ payment preferences by accepting localized payment methods, accommodate local or regional regulatory requirements, and manage a wide variety of cross-border payment frictions — for every market they enter.

Because of frictions like these, international U.S. businesses wait 53% longer to receive cross-border payments than they do to receive domestic payments, on average, according to the Payment Orchestration for Global Commerce Playbook, a PYMNTS and Payoneer collaboration.

Get the report: Payment Orchestration for Global Commerce Playbook

“At the end of the day, the merchant’s entire revenue depends on the fact that each customer’s payment goes through,” Payoneer President Keren Levy told PYMNTS. “However, given the diversity of the payments market, the differences in local payment preferences and the complicated nature of tech infrastructure in eCommerce, ensuring a smooth and frictionless payment process is challenging.”

Facing Pain Points in Cross-Border Commerce 

In cross-border commerce, several pain points impact both the business-to-business (B2B) and the business-to-consumer (B2C) spaces.

For one thing, they must add payment methods native to these markets to their payment stacks and also ensure that they are operating in accordance with local know your customer (KYC) and anti-money laundering (AML) regulations such as the payment card industry (PCI) standards and the strong customer authentication (SCA) requirements set out by the EU Revised Directive on Payments Services (PSD2).

This often means finding new payment service providers (PSPs), payment methods, acquirers and risk providers to deliver the geographic-specific services needed to establish a local presence. U.S businesses looking to expand into China might need to partner with Ali-Pay or WeChat Pay, for example, in addition to needing to abide by local regulatory compliance requirements that can vary drastically from region to region.

Beyond adding new payments capabilities, businesses looking to optimize cross-border payments flows must overcome legacy cross-border payments practices like correspondent banking and manual processing that can add time and frustration to this already-complex process. They must also deal with uncontrollable variables like a payment provider’s sudden downtime or new regulatory compliance that add more friction.

Alleviating Many of the Growing Pains 

Payment orchestration providers can help alleviate many of the growing pains that businesses experience when they expand. They do so by providing a payment orchestration layer, which can support growth and facilitate more flexible payment flow management as businesses alter their payment stacks.

“Payment orchestration impacts the entire payment value chain, improving customer processes on a cross-functional level and impacting technology, customer experience, operations and legal,” Levy said.

With payment orchestration, businesses need to build and later maintain only one connection that gives them access to their desired payment partners across the world while providing value-added services like routing, reconciliation, payment analytics and more.

An API-integrated payment orchestration layer also enables businesses to add and remove features from their payments as they please, often with minimal friction. The integrated user interface that payment orchestration layers provide typically allows payment decision-makers to alter their stacks with the click of a button. This provides the operational freedom and breathing room companies require to fuel long-term growth.