Can you give us a quick rundown of what are the most common go-to strategies for handling payouts by merchants, especially across borders?
Consumer and merchant expectations are changing. The world is becoming increasingly digital and interconnected. Constant evolution is making people’s lives easier, and this sets high expectations. As a result, consumers and merchants are demanding speed, ease, and security across all devices and all services – and this extends to payments, whether these are made domestically or across borders.
With global ecommerce sales projected to reach USD 6 trillion by 2024, ecommerce growth is shaping the way we pay. 65% of ecommerce sales are transacted on a mobile device, and 80% of customers are interested in faster options to pay and be paid by businesses. 68% of sellers would become premium sellers to get paid in real time, according to research1, and this is especially the case within the cross-border market.
Apart from the well-known SWIFT, in recent years, the large card networks have also focused on bringing out more innovative, faster methods of moving money across borders, by leveraging card rails. Products like Visa Direct and Mastercard Send promise speedy, transparent, and frictionless cross-border money movement. Further to these, there are a wider variety of e-wallets that can facilitate multiple use cases within the cross-border space today. Many of these payment methods aim to facilitate cross-border payins and payouts in a frictionless, transparent, and cost-effective way, sometimes even instantly, and with the added benefit of funds receipt acknowledgment. This, in particular, is an area where legacy cross-border money movement companies fall short.
While still in their relative infancy yet continuing to evolve at a rapid pace, Open Banking APIs also hold much promise when it comes to revolutionising the cross-border payments space. Aside from the benefits associated with payment speed, transparency, and ease, Open Banking-enabled payments also bring additional KYC improvements, allowing businesses and banks to reduce the risks associated with transacting internationally. APIs can be used to check a customer’s identity or whether they can afford a transaction, for instance, enabling institutions to set precise limits.
What are the most frequently-encountered issues connected to payout systems, and how can these be solved or overwritten?
A number of challenges exist within the cross-border payout market today:
- UX – the user experience when making cross-border payments leaves much to be desired in many cases. The process is not often straightforward or intuitive, which can cause a lot of friction.
- Cost – typically, there is a great cost to merchants and consumers.
- Transparency – both when it comes to fees and where the funds are at any given point.
- Speed – cross-border payouts usually take multiple days to clear. In 2017, for 56% of disbursements, it took between 2 days to 14 days for recipients to receive their funds.
- Multiple processes – merchants have to manage a number of different processes, especially when the payment is sent across borders.
Thus, modern businesses need fast, intuitive digital experiences, with real-time payment capabilities integrated directly into existing apps, websites, or payment solutions – all functional at a global scale. Visa Direct and Mastercard Send offer a great alternative to legacy systems, and the benefits they provide help mitigate the challenges typically associated with cross-border payments. Because these systems have been built for the modern age of money movement, they do not rely on legacy bank technology, completely bypassing the correspondent banking messaging system created by SWIFT. As such, they offer lower costs, superior customer UX for both the beneficiary and the remitter, real-time money movement worldwide to billions of financial accounts, and end-to-end security and a compliance framework for both senders and receivers that is immediately available, without complex integration or implementation effort.
How can payouts to cards keep up with the rising need for instant payments?
We believe that instant cross-border payouts to consumer accounts leveraging card networks are helping to further drive the evolution of payments. Moreover, we are certain that instant payouts to cards are here to stay, enabling speedy payments across a variety of use cases and supporting both domestic and cross-border payments underpinned by secure and reliable global networks. They help drive digital experiences and provide frictionless, secure, superior customer experience while enabling real-time transfers 24/7 with funds available to eligible debit or prepaid cards in as little as 30 minutes.
It’s important for merchants to work with a payment partner who is globally connected, innovative, and flexible, as instant payouts to cards have real potential to accelerate revenues for them. So merchants will seek to work closely with payment technology companies to ensure they are enabling cross-border instant payouts for their customers – or risk falling behind.
Come 2023 and beyond, what should merchants keep in mind when provisioning for a better customer experience?
Customer experience when it comes to payments is key for gaining and retaining customer loyalty, increasing conversions, and ultimately accelerating revenue for merchants. Creating a frictionless, intuitive, and mobile-enabled customer experience is no mean feat, and working with the right payment partner is key to achieving it.
At Nuvei, we work closely with our merchant clients to understand their needs and their customers’ payment preferences, while constantly optimising our solutions to deliver against these. By being flexible and agile, we provide the payment technology and insights our customers and partners need to succeed locally and globally, with one integration. Enabling our merchants to offer their customers a superior digital customer experience ensures they can extract more revenue out of every transaction, whether domestic or across borders.
This article was originally published in The Paypers.