Typical Cross Border Payment Touches 6 Banks Before Completion

B2B payments face numerous hurdles even when they’re being made domestically, and adding international borders into the equation can compound the problem.

Wire transfers and other payment methods are often ill-equipped to keep international partners and employees satisfied. These transactions pass through an average of six financial institutions (FIs), and wire transfers can take as long as five days to arrive, as reported in the “Global B2B Payments Playbook,” a PYMNTS and Worldpay B2B Payments collaboration.

Get the report: Global B2B Payments Playbook

As they work to meet these challenges, along with shifting customer behaviors and their partners’ and employees’ needs, firms are examining new ways to optimize their cross-border B2B payments.

Reconsidering Traditional Methods

This comes at a time when many companies are modernizing their infrastructure and reconsidering the traditional methods used throughout their operations.

Read more: FIS Plans Expansions Into New Markets, Locations in 2022

With businesses keeping a closer eye on their cash flows, the routine price fluctuations that often accompany cross-border B2B transactions are now even more frustrating. Various factors, including the dynamics of the markets in which transactions take place and the payment amounts being sent, can shift wire transfers’ costs. These payments can also fail to arrive quickly enough, as funds generally take between three and five days to settle in recipients’ bank accounts.

The growing threat of fraud is another challenge. Much of the time involved in sending wire transfers stems from businesses verifying recipients’ financial details, as failing to get them right can cause funds to be sent to wrong accounts or to bad actors. Fraud scams targeting these wire transfers have long been an issue. Fraudsters perpetrating these schemes send emails that convince firms to wire money into fraudulent accounts.

Making Cross-Border B2B Payments Smoother

Despite these hurdles, businesses must accommodate employees’ and international partners’ needs. As a result, there are new technologies that can help them make cross-border B2B payments smoother and more secure.

Businesses are exhibiting interest several tools and payment processes that could address wire transfers’ weak points, including automated technologies that help them examine all details attached to transactions with more speed and transparency. This would mean pairing technology that can send this data in real time alongside payments sent via real-time networks, for example. Automation and technologies like blockchain are gaining momentum, with several card networks and payment processing firms offering blockchain-enabled solutions that can boost security and reduce transaction times.

The use of such technologies is expanding, but making these solutions feasible requires businesses’ partners to accept them, and different markets have distinct rules governing these payments and how the attached data must be handled. Blockchain must also see broad adoption to be effective, and both it and automation cannot reach their full potential if businesses’ partners still rely on legacy wire and paper-based transactions.

Firms doing business internationally must optimize their cross-border B2B payment processes to stay competitive. The challenge is not in finding available solutions but in implementing them effectively. Deciding which tools are best suited to companies’ and their international partners’ payment needs could be key to helping them thrive.