We live in an increasingly connected world. Businesses need to communicate with customers – and each other – quickly and easily, no matter where they are based. Forging such close working relationships with international contacts is crucial and living in different time zones is no longer a viable excuse for mediocre standards of service. Therefore, cross-border transactions must be efficient and stress-free, with delays and complications to payments leading to clients looking elsewhere.
The volume of global commercial payment flows sits at $120tn and is expected to rise rapidly in the coming months.
“I think it’s going to accelerate post-pandemic,” says Ed Adshead-Grant, general manager and director of payments at Bottomline Technologies. “Global trading will continue to grow, especially given the acceleration in digital because of the Covid-19 conditions.”
However, there are challenges hindering cross-border payment growth. The Bank of England, for example, noted that cross-border payments lag behind domestic ones in terms of cost, speed, access and transparency. In fact, cross-border transactions can sometimes take several days to complete and cost up to 10x more than a domestic payment. To address this, the G20 and the Financial Stability Board have created a roadmap to strengthen and modernise the cross-border payments infrastructure.
Adshead-Grant acknowledges some cross-border payment services are “opaque, slow and unpredictable”, but argues that this merely presents an opportunity to do things better.
Alan Koenigsberg, global head of new payments at Visa Business Solutions, agrees. He believes innovation in the B2B cross-border payment space is long overdue.
“Accelerating the digitisation of B2B cross-border payments will continue to be a key theme for decades to come,” he says.
Speed and reconciliation key to growth
Commercial payment flows can be broken down into three main areas: card-based payments; domestic accounts receivable/accounts payable solutions’ and cross-border payments. The needs of businesses across these three core areas remain consistent, according to Koenigsberg.
“Payment speed and reconciliation are of the utmost importance to corporate clients,” he adds. “Real-time data and payloads generated automatically and alongside transactions mean that payments post more efficiently.”
Both Visa and Bottomline are aware of the importance of making cross-border transactions as pain-free as possible for all concerned. The two have worked together on various projects for almost a decade
This collaboration has expanded following Visa’s introduction of Visa B2B Connect, a global multilateral network that simplifies cross-border payments by facilitating predictable transactions between originating and beneficiary banks. Bottomline acts as the technical enabler of Visa B2B Connect, to help banks get up and running as quickly as possible
“The solution enables efficient cross-border payments to help participating financial institutions to transact efficiently, manage, and grow their payment services and products,” says Koenigsberg.
Win-win for banks and businesses
The network was developed to address “specific pain points and challenges” that exist in the industry today, he adds. These factors range from lack of payment transparency and predictability to the need for access to consistent data, all at a lower cost. Tackling these pain points is at the heart of Visa B2B Connect.
“We leveraged many of our core capabilities, such as security, globality, settlement and robust compliance infrastructure to reimagine a better way to do cross-border, high-value payments,” says Koenigsberg. Currently live in 104 markets around the globe, Visa B2B Connect delivers a range of benefits to key players in the payment’s ecosystem.
“Our goal in building Visa B2B Connect is to provide a product that breaks down geographic barriers and is scalable, meeting and exceeding the high standards of an industry environment where compliance, control, governance, and security are all of equal importance,” he says.
Bottomline plays a key role in the process. Its strength lies in its ability to enable the same messaging files to be used that are sent across correspondent banking network. Bottomline then takes these files and applies intelligent routing and tracking to open the Visa B2B Connect rails for any business, ensuring that each payment can be processed via its optimal route.
“Our role is to be the technical onboarding partner to support [Visa] on this innovative solution they brought to market,” adds Adshead-Grant. He also highlights the benefits of the digital identity feature of the network, the intelligent tracking and tracing that has been put in place. “Just knowing where everything is in near real-time always lends itself to better decisions,” he says. “As transactions flow through this solution, you can track, trace and see them.”
The enrichment of data facilitated by the ISO 20022 standard, he adds, can also help with pre-processing. “One big area is beneficiary account checking, making sure that they’re good accounts that will be paid at the other end.” It all rolls towards improving the straight-through processing and working out how to stop delays, rejections and broken payments.
Both Visa and Bottomline see the solution as a win-win for banks and businesses. It is seamless, secure, flexible and scalable. As such, it ticks every box. Banks benefit from a state-of-the-art infrastructure for cross-border B2B payments and can enhance the experience they offer customers, while reducing operational overheads. Businesses, meanwhile, get access to a more secure and consistent cross-border payments process, with clear transaction costs and payment schedules that help reduce uncertainty. In many ways, this is just the beginning, according to Bottomline’s Adshead-Grant, who is clear on the overall goal: “The dream is to make an international payment as easy as a domestic one. It’s one of our ambitions. We’ve got the technology to make it fast, visible and transparent, so that’s where we’re heading.”