The good news is that Nuvei stands ready to help you, and together we can make the process as painless as possible.
First, let’s establish what we mean by “cross-border payments”. A cross-border payment is when a Consumer in Country A sends a payment to a Merchant in Country B. While this might seem simple enough at first glance, the fact is that it’s a lot more complex than you might think. This is because there’s another player involved that most people never consider: the backend provider.
In short, payments that are sent by an individual, business, or government agency in one jurisdiction to a payee in another are generally termed “cross-border payments”. Such payments are typically perceived as being slower, costlier, and more opaque than domestic payments. Cross-border retail payments involve more risks to manage, complexities to navigate, and rules to comply with than domestic payments. The difference between the two in terms of end-user experience can often feel more disproportionate than those factors might explain.
This difference is exacerbated by technological developments and innovations that have recently led to broad improvements in domestic payments in many countries at the same time as cross-border retail payments are becoming increasingly important for many end users, which is likely to further increase the already huge volume of cross-border payments. Manufacturers are expanding their supply chains across borders, and international trade and exports, cross-border e-commerce activity, and international remittances are all growing, and so is the burden on the backend provider.
What does the backend provider do?
The backend provider is where all the legal and technical issues are handled, including issues like currency conversion and making sure that the products being purchased are permitted in both countries.
Many of these services happen without the knowledge of the consumer or the merchant. PSPs provide these services using agreements or outsourcing arrangements. Examples are:
- Transaction banks offering correspondent banking services.
- Aggregators that net cross-border payments.
- Operators of payment systems with links or a direct presence abroad.
- Foreign exchange agents.
- Specialized providers who mitigate financial crime-related risks.
- Network providers offering cross-border messaging services.
This can be time-consuming and expensive. This is why corporations, mobile money operators, and banking institutions who are looking to move funds across more territories are increasingly adopting cross-border payments gateways to boost operational efficiency, minimize cost and increase profitability. As global trade continues to expand, borderless e-commerce continues to rise. This is a trend that will only continue to rise.
How Nuvei helps you avoid pain-points
Let’s take a moment to go over some of the ways we can make sure that you’re dealing with cross-border transactions in the best way possible. While there are certainly significant issues that you need to be aware of, there’s no reason to be worried - your partners at Nuvei have you covered! We’re worked tirelessly to ensure that all of your payments go through with a minimum of hassle.
Multiple regional payment options for you to offer your customers
Regardless of the countries in which you choose to operate, a cross-border payment gateway for your operations will enable you to accept payments from your customers in their local currencies and seamlessly settle in your preferred currency in real-time. This will ensure you expand across borders and emerging markets.
Bulk payout technology
This involves paying out to multiple payees such as suppliers, vendors, or sub-merchants located in multiple countries on a regular basis, thereby enjoying the benefits of a certain and consistent foreign exchange rates as well as faster payment time. An efficient cross-border payment gateway will enable you to automate highly scalable payments in multiple currencies, payment methods, and to multiple countries.
The best security available in the industry
Cross-border payment gateway technology can be beneficial to your business by providing enhanced security as you move funds from one area to another. It’s a given that in our industry, payment security will make or break customer trust in your business. By integrating with Nuvei, you’ll enjoy the benefits of multi-factor security and financial regulation. You can be sure that customer data is properly maintained and protected at all times.
The problem with compliance
Reported cost factors for cross-border payments include correspondent banking fees, FX costs, telecommunication costs, scheme fees, interchange fees, and fraud. The need to adopt new technologies to meet end-user expectations or to match the services offered by competitors was a key challenge for many providers, especially in light of rapid technological changes and uncertain end-user acceptance.
When asked to cite the highest costs and challenges to their business, merchants overwhelmingly listed legal, regulatory, and compliance considerations more than any other issue. Cross-border payments demand significant compliance efforts from all parties involved. For cross-border payments, the number of relevant parties and jurisdictions complicates and often multiplies compliance efforts. PSPs may face uncertainty about the interpretation/application of compliance requirements and difficulties obtaining centralized compliance information.
Consequently, PSPs may view cross-border payments as involving higher risks and costs of compliance than domestic payments. This perception may have contributed to situations where financial institutions terminate or restrict business relationships with certain categories of customers. However, this doesn’t need to be the case. There’s no reason why technical issues on the part of your gateway should limit the types of businesses that you’re able to board and support.
The bottom line is: if you’re doing significant cross-border business (and who isn’t these days?), you can’t afford to remain in the dark regarding how such payments work. However, it doesn’t have to be difficult or confusing. Your Nuvei partners are always available to discuss ways of making your international transactions faster, safer, and more profitable. Contact us today if you have any questions or concerns because we’re always glad to hear from you.