Demystifying Cross-Border Payments

How Remittance Methods and Currency Issues Affect Global B2B Payables

From transaction and conversion fees to reliability, no single payment method works optimally in every situation. Understanding the effect of global payment remittance is critical to creating a payables strategy that:

  1. Ensures greater delivery success
  2. Reduces the risk of losing payees
  3. Scales with global initiatives
The Currency Conversion Conversation

When paying globally, the issue of currency conversions and foreign exchange naturally come up. And depending on the country, there are vastly different reasons where local currency may or may not be favorable.

Based on our remittance data over the last 12 months, when given a choice to automatically have currency converted, here are the countries and the percent of payees that opt for a conversion at the time of payment. The data identifies that payees in some countries have a higher propensity for wanting to be paid in local currency, while others prefer USD.

In building a global payment strategy, finance and treasury teams need to understand the administrative and operations costs of taking on conversion efforts and weigh that against what they think they might save negotiating exchange rates with their bank. The process of establishing and maintaining foreign accounts and maintaining proper governance over them, may not be the best approach. Offloading the effort to an expert may offer the best experience for payer and payee.

Challenges to Multiple Methods and Currencies

Managing multiple payment methods and currencies can be extremely complex, which is why many businesses avoid it. Falconloop handles six different methods and estimates that in those six, there are over 26,000 global remittance rules to contend with. Expecting a team to adhere to those rules manually at scale can be expensive and not a responsible use of operational funds.

① Get the right data into the system to make payments
② Simplify payments across multiple methods

The answer to solving this complexity, especially as part of a scalable payables strategy, involves two technologies that streamline the ends of the process: