It’s easy to recognize when your payment process lacks sophistication and versatility, but how can you calculate the overall cost of your current cross-border B2B payments efforts? If you’re not using the right cross-border payment solution, then you may be losing more than just revenue. We’ve laid out ways to quantify the immediate and secondary expenses of your current B2B payment efforts and what to look for in a cross-border payment solution.

Look into your number of failed payments

If your current payment solution lacks validation APIs, then you’re likely experiencing a higher than average payment failure rate. Although adding a validation API may seem like a small detail, the ability to verify payment information for accuracy before it’s sent will save you and your customers significant time, hassle and money.

Consider the operational costs associated with miskeyed or inaccurate account information. If payment information can’t be verified and corrected by the sender before a payment is initiated, then the burden of rectifying any payment issues is shifted onto your organization, unnecessarily complicating and lengthening your payment processing timeline. By investigating your current volume of failed payments and weighing the time your billing department and customer support team routinely spend dealing with the fallout of this issue alone, you can better understand the cost of this inefficiency.

Weigh your operational expenses

In addition to failed payment issues, an overly-manual payment process will have associated operational costs that inhibit your ability to grow and expand your customer base. The businesses who thrive in the global economy are those who master the art of accomplishing more (and still delivering top quality) with less — something that’s only possible when you augment expertise with the right technology resources.

Leveraging a third-party payment solution will reduce your need for manual payment oversight and input by upwards of fifty percent, so you can reallocate your employees and resources to tasks that will take greatest advantage of their talents and time. In such a way, building a lean payments solution can enable rapid scalability by keeping operational costs low in relation to net customer acquisition.

Calculate transaction fees and exchange rate expenditure

If you’re looking to expand into international marketplaces or are already conducting business across borders, the cost of your cross-border payment processing method should be top of mind. Businesses who frequently leverage wire transfers to send and receive payments abroad unnecessarily shave their profit margins by paying inflated exchange rate and transaction fees. But how do you determine just how much you’re losing due to FX costs?

Typically, banks charge flat-rate fees for FX transactions that hover around 3-5% of the total transfer amount regardless of current FX market values. This inflated fee allows them to host the transaction without bearing any FX risk or sacrificing profit to other institutions participating in the transaction stream.

Transaction fees are hosting charges and don’t cover the cost associated with buying and selling currency on the FX market (exchange rate fees). Exchange rate charges are added on top of transaction fees, inflating your overall transaction cost by another 2%. Traditional international wire transfer methods don’t provide the host with real-time insight into current FX rates, so exchange rate fees are often not disclosed to the sender until after a payment has already been initiated. This lack of transparency can cause payments to arrive to the beneficiary short of the intended amount, since the sender has no surefire way of accurately anticipating the amount they’ll be charged for the exchange. Since exchange rates are determined by FX brokers, banks or other hosting institutions, there’s also no guarantee that the rate you’re getting is consistent with market value. In addition to obvious revenue impact, inaccurate payments, like failed payments, come with a heavy operational cost.

With the advent of third-party payment platforms, you can leverage a vast international payment ecosystem to host cross-border transactions and make exchanges when FX rates are optimal. The ability to execute and control your cross-border payment streams also means that you’ll avoid paying inflated transaction fees on outbound payments. Our cross-border APIs provide real-time insight into FX exchange rates, so you can offer the same transparency to your customers and keep your pricing competitive as you expand.

Consider your customer experience and growth potential

Whether you know it or not, your payment functionality directly influences your ability to grow and meet customer expectations on a global scale. If your current payment process doesn’t allow international customers to pay in their local currency or doesn’t provide real-time insight into exchange fees, then you’re asking customer to shoulder the burden of maintaining an international business relationship. Without the ability to control FX fees and dictate the cross-border payment experience, you run the risk of losing customers to local and international competitors who can offer better rates alongside a frictionless customer experience.

Offering customers local payment options and competitive prices will increase customer loyalty and lifetime value. In addition, a more automated payment process will free up business capital, time and people to focus on improving your core product and responding to the needs of your growing customer base.

A third-party payment solution can save you capital on cross-border payments and allow you to offer customers fair, flexible and efficient payment options, regardless of location. Find out how our Global Collections solution can help you achieve more with less.

Richard Arundel

As one of Currencycloud’s founders, Richard has played an important role in the company’s rapid growth. Having started his career at HiFX – one of the largest foreign exchange market brokers in the UK – Richard has a deep understanding of the finance and payments sector. Prior to becoming GM of Currencycloud’s North America business, Richard has held successive positions as Sales Director, Client Relationship Director and VP Client Services at Currencycloud, helping the company increase revenue, size and scope. Having left London for New York in 2017, Richard is now responsible for performance across the US, including directing sales development programmes and go-to market strategies. His experience in creating high performing teams, as well as building and maintaining partnerships in the world of fintech, is the driving force behind Currencycloud’s US strategy.