Pave the Way for Speedy, Simple Cross-border Payments

The number and value of cross-border payments have skyrocketed in recent years — and there’s every reason to believe that growth will continue. A report from FXC Intelligence predicts that the market will catapult from $190 trillion USD in 2023 to $290 trillion USD by the end of the decade. Despite this meteoric rise, however, all too often lagging cross-border payments offer poor experiences for payers and payees alike. To reach their full potential, cross-border payments must afford customers the ease they have come to expect from other digital transactions. Open banking APIs are proof that ‘better’ is indeed possible.

Why are cross-border payments so challenging?

While domestic transactions often occur almost instantly, international payments get mired in a series of transfers from one party to another, typically taking 3-5 days to reach the target recipient. For many years, the majority of commercial cross-border payments have relied on correspondent banking models — smaller banks with operations in a single country partner with larger banks with a presence in other markets. This often requires multiple handoffs, manual processes, fees or charges from every bank or institution involved in the payment, inconsistent currency conversion rates, and varying laws from one country to another. With limited visibility into the complex process, some of the drawbacks of this system become clear.

While services like TARGET Instant Payment Settlement (TIPS) have streamlined cross-border payments within the EU, there’s no global equivalent. In addition, TIPS does little to help merchants accepting payments from customers who reside outside of Europe. Cryptocurrency offers real-time transfers, but comes with its own risks and volatility. Society for Worldwide Interbank Financial Telecommunications (SWIFT) has improved communications around international transfers, but doesn’t reduce processing times or costs.

From a customer perspective, the process can be painful. I run a specialty retail shop and regularly place wholesale orders from suppliers in other countries. While my small local credit union claims to offer international electronic funds transfer (EFT), every time I’ve tried to use the service, it’s taken at least a week for the funds to reach the vendor, and often, neither one of us has received any notification that the payment has been processed successfully. In one case, the funds were simply missing for 15 business days — though they were no longer in my account, they had not reached my vendor and neither of us could get a trace from our respective financial institutions. After that incident, I refused to attempt international EFT again, opting for PayPal or credit cards instead, though this often means I pay an additional surcharge.

Assessing a variety of cross-border payment scenarios

Organizations often have difficulty testing even the most common cross-border transactions, such as a traveler using a credit card outside their home country. Yet they must test all sorts of transactions, ranging from overseas transfers to in-person payments abroad to ensure funds flow properly, exchange rates are calculated correctly, and payments comply with the legal and security requirements governing every institution involved in moving the money. And let’s not forget anti-money laundering (AML) checks and compliance requirements once the level of transactions hits a certain threshold.

Even services like Stripe and Payoneer offering cross-border payments that bypass traditional banks must still validate payments and ensure a seamless user experience from both the consumer and merchant perspectives… No easy feat.

Crowdtesting brings clarity and transparency

When banks, card networks, merchants and fintechs need to assess international payments, crowdtesting can pinpoint problems and sources of friction. Crowdtesting can quickly provide access to testers in specific locales to help you understand the customer journey. Whether you need someone with a U.S.-issued VISA card making a purchase in Europe, a small business owner in Australia attempting to wire money to a supplier in India, or a merchant in an area that’s about to see a huge spike in international traffic due to a special event, the world’s largest testing community lets you cover real-world scenarios.

Testing specific scenarios in real-world environments, with real bank accounts, credit cards, debit cards, digital wallets, and merchants can ensure you remain compliant with all relevant and applicable regulatory requirements so your organization maintains its operating licenses.