Why Cross-Border Payments Are Still a Pain Point for Businesses and Consumers

Let us look at some hypothetical examples to understand the issues in the market regarding cross-border payments and be better positioned to solve them.

A SMB in Mexico wants to expand its electrical appliance business in the US. The customers pay the transportation cost of the goods, as the base price is lower irrespective of the increased logistics. But the business’s feasibility is impacted when more charges are added to the transaction, like correspondence and clearance. Moreover, production can also be severely affected by delays in settlement, which might cause the manufacturer to take a higher advance. This requirement might again impact order conversions.

Take another example of an entrepreneur trying to bootstrap in the US. The nature of their business is such that they do not require full-time or onsite staff. Since the demand for labor is high in developed economies such as the US, the entrepreneur looks for freelance talent in developing countries to get the most for their money without burning a hole in their pocket. They cannot compromise on the quality of work when kickstarting a business. Despite lower contractual expectations of independent contractors (ICs) in other countries, the entrepreneur still has to pay huge sums in exchange rates to pay off the ICs unless they’re exceptionally good at running their books and investing idle capital for returns to cover those costs. Moreover, the entrepreneur might have to plan to pay five days before the payment date, as it often takes that much time for cross-border payments to be cleared, especially if they are interbank. It affects them adversely and might even impact the quality of their work.

Having discussed some cases of international commerce and how important it is to simplify global payments, let’s have a look at the pain points in detail: