Smashing the glass ceiling of international payments

Comment by Yishay Trif

The Web can be a cruel place, especially for small businesses. 

The internet promised a shop window to the world: a way for SMEs to compete on a level playing field with even the biggest players in the market. But as many smaller businesses know, the web isn’t always a window. More often, it’s a glass ceiling. The problem is payments.

Transferring money across borders is an expensive and complex business, especially when it involves multiple, small, and frequent payments. In the UK alone, SMEs lose £4 billion a year that’s “hidden” in their banks’ international exchange rates.  

Research from Oxford Economics found that small and medium-sized businesses pay between 1.12 and 3.68 per cent extra for the “privilege” of doing business abroad.  

Trif: winners are e-commerce giants

Meanwhile, companies that do business in multiple markets often have to partner with more than one payments provider, making international trade more trouble – and more expense – than it’s worth.  

The winners from the current payments model are the e-commerce giants, which alone can leverage the enormous economies of scale to provide truly cross-border business. Small businesses can only look on impotently as they see big corporations steal not just international customers, but an increasing share of their home market, too. 

But a long overdue revolution in payments is finally upon us: one that promises easy and affordable international trade to every business on the planet, and finally delivering all the benefits the Internet promised but, until now, has failed to deliver.

If this trend has been brewing since the dawn of the Internet, the Covid crisis threw it into stark relief. Lockdown has saved countless lives around the world, but it has been devastating for smaller businesses. With footfall and revenues plummeting, SMEs are desperate to find new markets and new customers.

While small businesses struggled even to survive in 2020, the big corporations enjoyed one of their best years ever. Amazon, for example, posted record profits last year, with revenues up by over a third to almost $100 billion as homebound consumers treated themselves to a lockdown shopping spree.

But this isn’t all bad news for smaller businesses: it shows that there is still a huge potential market, if only they can find a way to tap into the world economy by supporting international payments.  

The smartest, slickest payments service is little use to a small business if it does not connect to banks and other financial services providers

And what for so long was just a pipedream, a tantalising yet unreachable prospect, is now possible thanks to a payments revolution which promises to make 2021 (and the years beyond) ripe with opportunity for businesses of every size.

In this era of online banking, payment apps and even digital currencies, the biggest myth about money is that technology is the single most crucial consideration of international payments. In reality, the most important factor is what it always has been: relationships.  

The smartest, slickest payments service is little use to a small business if it does not connect to banks and other financial services providers, or if it doesn’t comply with national regulators in the markets where you need to do business.  

That’s where the real payments revolution is happening: through payments providers that are creating the complex network of relationships necessary to facilitate fast, simple and affordable international transfers.  

Obviously, not all payments providers are equal. But recently, we have seen a new breed of platform begin to emerge. What makes these providers special is the time they spend forging relationships with banks, regulators and other financial stakeholders so that they can smooth the path of payments, and make it as easy to make and accept international payments, in whichever currency you need, as easily as in your home country.

With a little research, small businesses can find a payments partner that has done the legwork to create the relationships needed to make payments anywhere in the world.  

International payments will always be complex, but that doesn’t mean it can’t be easy for small businesses

The businesses pioneering the international payments revolution take complete control of settlement and distribution in multiple markets, while making international transactions as simple as any consumer financial service or personal money app.

Just as mobile apps transformed the consumer banking experience, small businesses can now take advantage of easy-to-use e-wallets which enable them to hold money in any local currency, and transact with banks and payment institutions anywhere in the world.

International payments will always be complex, but that doesn’t mean it can’t be easy for small businesses. The role of financial services providers is to do all the hard work behind the scenes by integrating with payments infrastructure, securing regulatory compliance across various jurisdictions, and partnering with worldwide financial networks. 

When small businesses can process transactions quickly, accurately and without the expense and complexity of traditional banking infrastructure, they can smash the glass ceiling of payments, and finally open their shop windows to the world.

Yishay Trif is CEO at MoneyNetint