How to make B2B cross-border payments better

We consider whether there’s a way to improve international funds transfer.

Every business needs to buy goods and services from other businesses. With the globalisation of labour and supply chains and digitisation of commerce, increasingly such payments are happening across national borders. This makes having an efficient and effective international B2B payment solution more important than ever.

However, just because B2B cross-border payments are important, it doesn’t necessarily follow that they work well. International funds transfers often take too long and cost too much, certainly when compared to domestic transfers. What’s more, it’s not always clear where the funds are and when they’ll arrive either.

But what if there was a better, cheaper way to send international payments as quickly and easily as a domestic bank transfer? What could this do for banks and financial institutions, but also their business customers?

What’s the problem?

 The world today is mobile-first, near-instant and on-demand. Yet cross-border B2B payments seem to be stuck in a bygone era.

Whereas consumers can tap their cards or phones to pay for things locally. Making cross-border business payments remain complex, time-consuming, manual and expensive. There’s also a general lack of transparency around pricing, timing and tracking.

This is no small problem as cross-border B2B payments will surpass $40 trillion in 2024, a 9% increase on $37 trillion in 2022.

Processes and workflows around cross-border trade are similarly cumbersome, inefficient and slow. They frequently rely on paper bills of lading, warehouse receipts, promissory notes and letters of credit.

So much so, an estimated four billion paper documents are being processed at any one time worldwide. Digitalising paperwork could boost trade by $1.2 trillion across Commonwealth countries alone, principally through reducing costs and increasing access to trade finance, a 2022 report found.

Why are B2B cross-border payments broken?

The reasons for broken B2B cross-border payments are many are varied. It’s partly due to the technical limitations of international correspondent banking systems.

It’s partly to do with legacy attitudes around ‘this is the way it’s always been’ or ‘this is the way we’ve always earned fees’. Banks and financial services firms haven’t necessarily innovated or had the incentive to do so.

And lastly, where there has been innovation, it hasn’t gone far enough. Payment innovation has been mostly B2C, domestic and on the front-end. B2B cross-border payments and back-end infrastructure have not seen the same levels of innovation.

It’s no wonder that speeding up cross-border payments and simplifying international trade is a priority for policymakers and regulators. In 2020, the G20 group of nations made enhancing cross-border payments a priority. Meanwhile the EU is introducing measures for SMEs to be paid faster by large corporates.

What’s the solution for broken B2B cross-border payments?

What if someone could create a different way of moving money cross-border outside of traditional correspondent banking systems?

That’s exactly what Inpay has done with its global network of sending and receiving institutions. Inpay provides low-cost, fast and secure multi-currency cross-border payments as an alternative to SWIFT wire transfers.

• Coverage – Our network covers 200+ countries. This includes the 36 SEPA countries via the standard SEPA and instant SEPA solutions, the UK with GBP and further afield with local payment offerings.
• Speed – Payments are quicker than the 2-5 days an international wire typically takes. That’s because much of the traffic rides on real-time payment rails. Inpay also receives funds in any currency and pays out locally in real-time.
• Cost – Inpay’s direct access to domestic clearing channels helps minimize fees normally charged by intermediaries in an international correspondent banking chain. This means payments arrive in full without deductions, but also makes them cheaper.
• Complexity – Inpay’s services are available via a single integration with a choice of connection methods: API, SWIFT, file upload or customized API. This removes barrier to entry to alternative ways to move money cross-border.

How might the future look?

Every business needs to pay suppliers and staff, and sometimes customers too, while keeping a keen eye on costs. But modern-day payments are more than just moving money from A to B. Done right, payments can be value-adding in their own right and help towards business objectives.

Banks can compete strongly against their peers and tech-savvy new entrants by offering a superior customer experience. Plus improve payment efficiency for themselves and their business customers.

Businesses can manage their cashflow better. But also plan for the future by managing stock optimally, never missing a sale, forecasting better to anticipate potential problems, growing customers and revenues and so on.

This is beneficial for individual businesses, of course, but also for communities, societies and economies, too.