As millions of consumers shifted their shopping activities online, businesses faced numerous barriers when meeting them there, particularly companies seeking to penetrate the United States market from abroad. From complex anti-fraud and anti-money laundering regulations to the difficulty of opening bank accounts in the U.S. as a foreign entity, even well-established businesses from countries such as Brazil have found expansion a challenge.
In The New Instant Enterprise: How Borderless Financial Services Power eCommerce Innovation
, a PYMNTS and USEND collaboration, PYMNTS examines the cross-border payments landscape, revealing new ways that enterprises can simplify the process of sending and receiving funds while expanding their businesses. Our research shows that finding a solution for frictionless cross-border payments is a challenge for companies everywhere. The range of regulatory and infrastructural barriers to merchants, brands and other businesses executing and managing cross-border payments is significant, and it hinders growth for eCommerce companies globally — even in more advanced economies. That complexity, for many companies, makes growth especially difficult: enterprises that have access to a robust and flexible banking infrastructure that permits simple international payments enjoy a clear advantage in the marketplace.
Yet most newer companies (and many larger ones) do not have access to a “plug and play” option when it comes to banking infrastructure. Sending and receiving payments from abroad in local currency often means dealing with multiple banks and a host of compliance directives which may contradict each other. Some companies may try to develop their own method of managing payments abroad. Often, these efforts fail because they cannot scale effectively.
An ad hoc approach to se
curity, which is often used by younger eCommerce businesses, can nevertheless be just as daunting to implement and result in numerous errors. A system that flags users or businesses based on a single variable (such as a region or a data entry error) can lead to false positives for fraud.
That may mean inconsistent payment experiences on the consumer side along with potentially costly chargebacks and slowed payments due to processing errors. The solution? Many companies are turning to API-based solutions to power their apps and web-based purchases. Payment service providers (PSPs) allow businesses of any size plug in to a robust banking infrastructure that makes cross-border payments painless.
The right PSP will allow eCommerce companies and marketplaces to send and receive payments to and from customers and merchants in developing countries easily. PSPs that are know your customer- and know your business-compliant manage the intricacies of global regulatory compliance for their clients, allowing U.S.-based entities to trade with customers and merchants in developing countries easily.
Another benefit of an API-based solution is that it allow
s growing eCommerce companies, already tasked with managing logistics and sales, to avoid operational delays due to regional restrictions that may halt payments altogether.
“Another point to notice is the impact of restrictions imposed by some countries, especially in the U.S. and the European Union, to transfer funds to a set of blocked or controlled countries or regions,” stated a Banco do Brasil spokesperson. “As these restrictions are not universal, a company may not be able to fulfill [its] USD financial obligations with partners located in blocked [or] restricted countries, even if there are no restrictions between the countries involved [in] the transaction.”
The right PSP can therefore expedite user authentication and launch secure transactions quickly for business owners globally. To learn more, download the report.