Managing the risks of international B2B payments

Understanding the risks and industry sectors in which you operate is critical to boost successful payments, maximize opportunities and be future fit, as Camila Vicenci Witt, Chief Risk & Compliance Officer at Inpay explains.

Cross-border payments are more complex than domestic ones, hence riskier, as Camila clarifies:

“We need to take different factors into account, such as legal risks caused by different countries’ rules and regulations. It is also important to consider the financial crime risks associated with cross-border money flows, and FX risks of currency conversion. Plus, due to the fact that funds transfers are not face-to-face, cross-border payments pose higher risks.”

At the same time, the G20 have highlighted the importance of cross-border payments for economies worldwide, which has brought increased focus to the risks.

“There are other risks we need to manage beyond Financial Crime in our industry. Due to the nature of business, our sector is the target of cyberattacks, making cybersecurity top of mind. What’s more, customers want transactions completed quickly. If payment service providers cannot execute instructions due to IT stability, this could affect their credibility,” says Camila.

How do you go about mitigating these risks?

No business can mitigate risks it doesn’t know about. So, risk awareness at an organizational level is critical.

“We have a culture of transparency, where we talk openly about risks, and employees are well trained around risk in general and enterprise risk management,” explains Camila. “Our people are sharp. We keep them up to date with training, plus invest in technology.”

“We mitigate risk by pairing minds and machines.”

Camila Vicenci Witt, Chief Risk & Compliance Officer, Inpay

In many companies, risks may fall between the gaps, as risk managers get lost in countless Excel spreadsheets. Inpay, on the other hand, has invested in a fintech platform that’s like a central nervous system, consolidating governance, risk and compliance.

“Instead of having a fragmented risk overview, we have a holistic, integrated system that gives us a fuller picture. We link our procedures to our controls and risk assessments. On the remediation side, we can also link our procedures to our controls and risk assessments, plus assign actions,” Camila explains.

Inpay has also recently purchased the full suite from AI-driven vendor ComplyAdvantage, which will improve its transaction screening and monitoring capabilities even further.

Risk management baked in not bolted on

There’s no silver bullet to risk management. But Inpay may have an advantage, due to its origin story and the vision of its founder.

When a deadly cyclone hit Myanmar in 2008, Danish entrepreneur Jacob Tackmann Thomsen went online to donate money. But when he realized that his credit card donation would lose 5% to fees and take days to arrive, he thought there must be a better way to send money abroad.

Inpay was born to make cross-border payments as cheap, safe, fast and easy as local bank transfers. Camila picks up the story:

“Governance, risk management and compliance (GRC) were embedded in Inpay from the start. Due to the vision of our founder and his experience in Big Data, RegTech and compliance, they were baked in, which is better than retro-fitting them.”

The same principle applies to product management. Inpay products have risk-mitigating features built in and must go to an internal committee of experts to be approved prior to launch. “We also benefit from having innovation in our DNA. There’s a natural path towards addressing risk-related challenges in innovative ways,” thinks Camila.

Opportunity begets opportunity

Embedding risk management also means developing strong processes and controls. This enables companies to maximize the upside of risk, namely opportunity, to benefit their customers.

Because of its robust KYC/KYB processes, Inpay can quickly grant access to new services and products for existing customers. For example, when customers want rapid access to a new currency or corridor, Inpay could expedite this due to its checks at boarding and throughout the relationship.

“Our knowledge of the jurisdictions in which we operate and our risk-based approach means we can expand our offering into under-served jurisdictions.”

Camila Vicenci Witt, Chief Risk & Compliance Officer, Inpay

Inpay also has a transaction completion rate just below 99.5%. This comes from having very good tools, gathering data, understanding the risks of our products, the industries and jurisdictions we serve, so we can separate false positives from true hits, concludes Camila.