5 advantages of using PSPs over banks for cross-border NGO payments

Cross-border NGO payments are broken. The workarounds don’t always work. It’s time to consider the alternatives.

Cross-border NGO payments are often slow, unreliable and costly. Payments are delayed, blocked or lost. It’s hard to track them or know where to turn for advice. NGOs also live with the constant threat of being off-boarded or ‘de-risked’ by their bank.

That’s what decision-makers at NGOs said during independent research we commissioned to understand their everyday payment challenges. It didn’t make for easy listening. But it explains why NGOs are increasingly turning to payment service providers (PSPs) over banks for their cross-border payments.

How did we get here?

It’s all too easy to blame banks for broken payments. They’ve not modernized their service. Their products and services are similar to each other and to what they have always been. The same few banks dominate. New entry is modest. There’s little to no competition and no reason to innovate. While true, this isn’t the whole story.

Banks are hamstrung by legacy and systems from 50 years ago. To process international payments, they linked different domestic systems together. This was okay in theory, but in practice individual banks couldn’t easily change things. They were part of a global system, and everyone had invested so much in the status quo.

Correspondent banking relies on banks acting as intermediaries for each other. They pass payment messages between the sending and receiving banks, sometimes in long chains. This makes it hard to track payments, predict fees or guarantee execution times.

International wires were always a workaround. The system may well have worked 50 years ago – and still work for traditional customers with traditional needs. But NGOs are not traditional, nor are their needs.

Why NGOs are turning to PSPs

New payment providers, like Inpay, have effectively built giant on-us bank networks, where payments take place between participant members. Inpay controls the routing of individual payments, which has numerous advantages:

 1. Reliability

We pick the optimal route for your cross-border payments, resulting in industry-leading transaction success rates. This is critical in a sector where failed payments can have a devastating human impact.

 2. Transparency

We know where payments are at any point between the sender and beneficiary. And exactly what to do to move them along. No more ‘black box’, delayed or blocked payments, without warning or explanation. Just maximum peace of mind.

 3. Speed

We’ve sped up payments from T7-3 to T0, partly because funds never leave our network. They’re simply re-routed to another account internally and sometimes pre-funded. That’s significant because time to funds could be a matter of life and death for NGOs.

4. Cost

We ensure there aren’t any unknown FX factors, or surprise intermediary bank fees, resulting in cost savings for NGOs. What’s more, not having to deal with frozen funds, blocked donations and missing payments could save NGOs €13,500-€50,000 pa, we estimate.

5. Expertise

We’re set up to provide the true consultative services that NGOs need. It’s part of our DNA, unlike banks for whom humanitarian aid payments are not their core business, or within their risk appetite. What would they know about specific NGO payment corridors? Or about the documentation needed to move stuck payments along?

Time to rethink the way NGOs move money

Non-bank payment providers like Inpay are emerging with the right connections to link NGO destination and origin countries. As they’re frequently global, they go beyond mere point-to-point solutions, meaning NGOs don’t have to source methods by country. Or maintain ‘back-up’ relationships with multiple suppliers, which is time-consuming and resource intensive.

Because they hold and process funds, these non-bank PSPs are regulated entities. A robust compliance approach and anti-financial crime controls are prerequisites of their license. This means they are already accepted by governments. And may well conform to NGO governance requirements to use regulated providers.

Inpay is a cross-border payments provider that is faster, simpler and cheaper than your bank – and built for NGOs.