Should your business try new-age payment solutions for cross-border payments?

Cross-border payments are on the cusp of a revolution. Although banks still take home most of the revenue, fintech companies are rapidly increasing their market share. According to a report ¹ by FXC Intelligence, non-bank providers handled 24% of B2B cross-border payments for SMEs in 2023, while banks accounted for 76%. This indicates a significant increase from previous projections ², where non-bank market share was expected to reach 17% by 2024.

This accelerating trend is a sign of deeper shifts, both in terms of technology and customer expectations. A new era is taking shape, defined by speed, convenience, and transparency.

For over 40 years, the SWIFT payment infrastructure, with its network of intermediary banks, has proved to be the dominant paradigm in cross-border payments. Although revolutionary for its time, this system is plagued by delays and friction. This is particularly true for SMEs, who routinely have to deal with transaction delays, complexities in compliance, opaque and unpredictable costs, and foreign exchange risk, as we have covered before.

Modern banking is increasingly characterised by speed and convenience, while old methods—which are paper-heavy and relationship-based—are being consigned to history. This shift is already evident in the area of domestic payments. Paper money and card transactions are being supplanted by real-time payment networks such as FedNow in the USA, UPI in India, and Faster Payments in the UK.

As more SMEs enter the global market, there is a growing demand for a similar, fluid, frictionless experience in cross-border payments. This demand has proved to be the catalyst for a number of recent technological breakthroughs. As a result, cross-border payments are moving in a new direction.

There’s a reason non-bank players are quickly eating up market share in the B2B cross-border space. Thanks to advancements in AI & machine learning, blockchain, payment APIs and digital wallets, cross-border payments are now fast, cheap & easy, without compromising on security. This has proven to be a huge boon for startups and SMEs, who didn’t always have the manpower and bandwidth to manage the complexities of cross-border payments. Here’s how technology is changing the game:

1. Settlements are getting faster and cheaper

Currently, most cross-border transactions rely on the SWIFT network. These payments take several days to complete and also come with a hefty fee. However, fintech companies are offering faster, lower-cost alternatives. Rather than rely on interbank transfers, these services use their internal networks to move money using local payment methods, thereby avoiding heavy transfer fees and moving money in a single day rather than several. More innovations are on the horizon — UBS recently piloted a blockchain-based payment network that allows clients to settle payments quickly and efficiently. The Bank for International Settlements (BIS) is also working on Project Nexus, a multi-country real-time payment network that will facilitate seamless cross-border transactions between Singapore, Malaysia, Thailand, the Philippines, and India by 2026. 

1. Transacting in multiple currencies is easier than ever

In the past, businesses operating across borders needed to maintain multiple bank accounts to manage transactions in multiple currencies. This was cumbersome, and expensive and often led to delays. Now, multi-currency wallets and virtual accounts offered by fintech companies have made things infinitely easier. These services allow companies to hold, convert and transact in multiple currencies without holding multiple foreign accounts. 

1. Compliance is no longer a tedious process

Historically, compliance in cross-border transactions was a slow and error-prone process. Today, artificial intelligence and machine learning solutions are simplifying Know Your Customer and Anti Money Laundering screenings by automating them. 

1. Modern payments are highly secure

Fintech companies make use of end-to-end encryption, tokenization and multi-factor authentication to add multiple layers of protection to sensitive user data, thus ensuring that modern cross-border transactions are highly secure. More recently, the development of AI-driven fraud prevention tools has made things even more secure. Thanks to their ability to scan through huge datasets in seconds, these programs can monitor and flag fraudulent behaviour in real-time. 

1. Payment integration is seamless

Not long ago, businesses handling cross-border payments had to use bank portals to initiate transactions , and then manually reconcile invoices with payments. This is no longer the case thanks to the advent of embedded payments and payment APIs. Now, companies can incorporate payment processing capabilities within their own website, sync data with accounting software, and automatically match incoming payments with corresponding invoices. It gets even better — if companies don’t have the bandwidth to build all their payment offerings from scratch, there are also a number of no-code APIs available in the market. Using these frameworks, companies can prototype and deploy new payment offerings quickly to test the waters, and easily tweak things as they go.

While there are now a number of modern solutions which have simplified the global payments experience for Indian businesses, there are still some hiccups. Some solutions don’t allow for transfers over a certain transaction size, while others have relatively higher fees and charges. Xflow is working at simplifying global payments and making them seamless by tackling all the pain points that users face – not just a few.

Before we embarked on our journey, we conducted extensive research, speaking to over a 100 potential users. Soon, we uncovered a familiar pattern—B2B payments were shrouded in complexity, opacity and frustration. We made it our mission to take cross-border payments in the opposite direction—reliable, predictable, secure, and affordable. This is reflected in our services for Small & Medium Enterprises. Here’s what we offer:

• Guaranteed live FX, with a three-hour rate lock: There are no hidden markups with Xflow. We only offer the real-time mid-market rate, ensuring full transparency. Moreover, we guarantee the final amount of the payment by ensuring that the FX rate remains constant for a three-hour window.

• The highest standards of compliance: At Xflow,we go above and beyond to safeguard your data, ensure your privacy, and manage your data carefully. We have successfully completed the Service Organization Control (SOC) 2 audit and attained ISO 27001 certification, which ensures that our information security practices match the gold standard.

• An amazing transfer pricing solution for startups: We facilitate fast, cost-effective, and compliant cross-border transactions.

1. Only a 1% flat fee on cross-border transactions. No SWIFT fees, no intermediary fees, no hidden markups.
2. No limita on transactions, which means companies can initiate payment in a single invoice with full compliance.
3. Next-day settlements via local payment methods like ACH Credit and Fedwire.
4. One-click eFIRA for every withdrawal in 24 hours, on the letterhead of an AD-I bank.

• A powerful receiving account for small businesses: The Xflow receiving account lets small businesses unlock their true potential by offering all the benefits of a foreign currency account without the associated hassles: 

1. Easy, 100% digitized KYC process that lets you create an account in 5 minutes. 
2. Hassle-free payments that don’t require back-forth with your bank. The funds are deposited directly into your account.
3. There are no restrictions on withdrawals, which means that you can withdraw funds received in your Xflow account whenever you want, as often as you want, and in any amount you require.

• Enhanced email security with BIMI: At Xflow, we are committed to the highest standards of security. To enhance trust with our customers, we have implemented Brand Indicators for Message Identification, or BIMI. This ensures that every email from us is marked with the trusted blue tick, so that our customers know that the message is legitimate and truly from Xflow.

• FIRC calculator tool: When we say no hidden charges, we mean it. If you want proof, check out this FIRC calculator tool we developed to see exactly what your current provider is charging you.

• Integration with third-party apps: Xflow is now available on the Zoho Marketplace, allowing you to sync cross-border payment data directly with your accounting system. Manage invoices, track funds and withdraw them quickly, all from one platform!

By ensuring the utmost transparency, convenience, and reliability, we believe we already have one foot in the future — one where cross-border transactions are as easy as domestic payments. So if you’re ready to lead your business into this new era, we would love to work with you. Get started with Xflow here.

References:

1. https://www.fxcintel.com/research/reports/ct-state-of-cross-border-payments-banks-banking-2024
2. https://www.mckinsey.com/industries/financial-services/our-insights/how-asian-banks-can-regain-the-cross-border-payments-crown

More article:

1. Guide on SWIFT code and IFSC
2. A founder’s guide to scaling internationally
3. What are the costs involved in international payments?