Functionality, not fancy tech, is what’s going to be at the heart of B2B payments innovation. With more and more companies transacting across borders – even SMBs and sole traders – seamlessness will be key.
Behind the scenes, it won’t necessarily be cutting edge technology that innovators look to. Blockchain will add value in terms of information legitimacy and fraud prevention and cryptocurrency remains one to watch as a currency option. But, as a method of delivering friction-free, cross-border payments solutions, from 2018 onwards, it’s all about the Ecosystem.
Source of innovation
Ecosystems are ultimately where the biggest immediate global payments innovation will come from. Traditional banks are aware that they are unable to deliver faster payment solutions or the customer experience in terms of data visibility and multi-device payments solutions on their own.
Nor, despite their size and wealth, are they able to build these solutions themselves. Partnerships with fintechs are the way forward. Juniper is forecasting that the proportion of cross-border B2B transfer values put through fintech startups will grow between 2017 and 2022 from 7.5% to 13.3%.
Agile, largely API-driven, operating securely via the cloud, fintechs provide innovation at speed and low-cost from the point of use by the customer. Many cross-border payments options are punitively expensive for SMBs. The high cost and slow pace of moving money into different countries and currencies is prohibitive to growth.
Traditionally, the infrastructure necessary to manage currency risks and monitor FX fluctuations has only been open to large corporations. Fintechs break down these barriers. Currencycloud’s Global Collections, for example, enables businesses to have a local bank account in the EU and in the US – the two largest economic markets with 700 million customers.
With payments remitted in either Euros or US dollars, it removes cost and confusion. If a US wine distributor sells a product to the EU, the European company is invoiced in US dollars. This must be converted before payment is sent and both parties pay a fee. The conversion process itself is also unclear. Who is charged for it, when does it happen (sending or receiving bank? At which rate?).
By levelling the playing field – payments are sent and received in dollars or Euros only, one single conversion needed – API-driven services can speed up as well as smooth over much of the confusion that can come from a cross-border enterprise.
The digital management of these processes also allows for further ‘bolt-on’ services to make the experience altogether more valuable. Insurance, working capital and letters of credit can be folded into an API-enabled payments process to hand control back to the B2B customer – large or small.
Technology, however new and shiny, is just a tool. Automation will save customers time, digitisation will save them worry, innovation will help them grow – but it’s in providing a great end-user experience that the value lies.
Learn more about Currencycloud’s array of payment APIs by contacting us.