The Convenience-Compliance Conundrum in Cross-Border B2B Payments

Seamless cross-border B2B payments remain one of the white whales of the connected economy.

And with the news Friday (Aug. 30) that Bridge has raised an additional $40 million round to continue building its stablecoin-based global payment scheme, executing international transactions quickly and conveniently is increasingly top of mind for companies looking to capture market share in foreign markets.

But the rise of faster and easier cross-border B2B payments has simultaneously elevated the importance of security and anti-money laundering (AML) compliance for high-risk transactions. For buyers and suppliers, finding the right balance between these competing demands — convenience and compliance — has become a critical imperative, one that could mean the difference between operational success and severe financial or reputational damage.

This was the theme of a speech given by U.S. Federal Reserve Governor Christopher J. Waller last Wednesday (Aug. 28) at the Global Fintech Fest in Mumbai, India.

“Not all frictions that slow payments down are bad,” Waller said. “Certain frictions are purposely built into the global payment system for compliance and risk-management reasons … there is no silver bullet that increases speed and efficiency without tradeoffs.”

“Granted, the practice today of sending payments through an often complex chain of correspondent banks contributes to slower payments that could benefit from efficiency enhancements,” added Waller.

Read more: How Compliance Is Shaping the Future of Cross-Border Payments

Balancing Speed, Convenience and Compliance 

For buyers and suppliers operating in high-risk, cross-border environments, balancing speed, convenience and compliance is frequently no easy task.

After all, cross-border payments, driven by advancements in technology, supply chain innovations and the increasing interconnectedness of economies, have become a cornerstone of global growth, enabling businesses to expand their reach, tap into new markets and engage with a more diverse range of suppliers and buyers.

But with this growth comes heightened risks. The nature of cross-border payments, particularly in high-risk regions, exposes businesses to a multitude of challenges, including currency fluctuations, geopolitical instability and varying regulatory environments.

Faulty cross-border payments cost merchants in the United States at least $3.8 billion in sales last year alone, according to the PYMNTS Intelligence report “Cross-Border Sales and the Challenge of Failed Payments.” Additionally, 70% of U.S. firms experienced higher rates of failed payments in cross-border sales compared to domestic sales.

At the same time, the anonymity and scale of digital transactions have made these payments attractive targets for fraudsters, money launderers and other bad actors.

The push for faster B2B payments has also led to a growing tension between speed and security. As businesses adopt real-time payment systems and embrace innovations like digital wallets, the risk of processing fraudulent transactions or violating AML regulations increases. The challenge lies in implementing solutions that facilitate rapid transactions while maintaining robust security protocols.

See also: Looking to Capture the Real-Time Opportunity in B2B Payments? You’re Not Alone

The Role of Technology in Enhancing Compliance

“Compliance has traditionally been a cost center designed to avoid risk,”  Sovos CEO Kevin Akeroyd told PYMNTS in an April interview. “It has not been a force for growth — but now, it’s turning that corner, and it really can be a force for growth.”

By embracing technology, adopting a risk-based approach, and fostering collaboration across the ecosystem, businesses can strike the right balance between speed, convenience, and security. In doing so, they can not only protect themselves from the growing threat of financial crime but also position themselves for long-term success in an increasingly interconnected world.

PYMNTS has previously covered how traditional methods of compliance management often fall short due to their reliance on manual processes and retrospective analysis, highlighting the role that future-fit advances like artificial intelligence (AI) can play in both securing and streamlining the global business landscape by helping firms enhance their AML compliance and detect suspicious activity in real time.

“There are two big things businesses want,” Boost Payment Solutions founder and CEO Dean M. Leavitt told PYMNTS in a separate April interview. “The first is cross-border payments mechanisms that are cost-effective and efficient in paying their suppliers abroad. That’s a clear desire on the enterprise B2B level. And the other thing is just broadly digitizing the ways in which businesses pay and get paid.”