Banks, bullish on fintech charter, seen driving cross-border payments growth

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London-based Currencycloud, launched five years ago to enable international payments for third parties via APIs, sees something new happening within the trend of rising demand for cross-border payments.

Smaller and midsize banks and corporations that previously looked to third parties to handle international transfers want to operate their own cross-border payment solutions, according to Nabeel Siddiqui, Currencycloud’s vice president for North America.

“A lot of Tier 2 and Tier 3 banks in the U.S. and Canada have been living in an ecosystem that’s decades old for funds-transfers, but as they see more fintechs targeting the remittance arena, they want to get in on that,” he said.
U.S. corporations with heavy international payments traffic between buyers and suppliers are also examining ways to own fintech solutions that can streamline their processes and cut cost, Siddiqui said.

Existing U.S. regulations impose various barriers for directly enabling corporations’ international payments, but Currencycloud has high hopes for a possible breakthrough from the Office of the Comptroller of the Currency (OCC) and its proposal to grant limited-use banking charters for fintech firms, outlined in a December 2016 paper.

“We’re paying close attention to the OCC charter to see how that develops,” Siddiqui said, adding that the agency's next action on the charter is expected in April.

The proposed charter could streamline operations for Currencycloud and its corporate customers by eliminating the need to obtain money-transmitter licenses in each state, a costly and time-consuming process critics say hobbles financial services innovation.

“We already have most of the money-transmitter licenses we need, but the OCC’s fintech charter could expand our reach and make it easier for us to work with more companies in new vertical channels,” Siddiqui said.

Rising competition among providers of cross-border payments services actually is a plus for Currencycloud, because it’s a partner to several, including TransferWise, he said.

Currencycloud has provided API services to clients such as Meridex, which enables money transfers for businesses; Vio Commerce, a global peer-to-peer payments service; Trov, a property insurance company; and GetMyBoat, an app that brokers rentals of jet skis, yachts and other watercraft from owners in hundreds of countries.

Currencycloud’s revenue comes from licensing its customizable APIs for secure cross-border payments, which sets it apart from many remittance operators whose solutions depend on generating profits from foreign exchange rates, according to Siddiqui.

Currencycloud opened its first U.S. office in 2015 in New York, and in January the company hired Ed Addario, a veteran from Mysys and Monitise, as its CTO. Addario oversees 45 technologists building APIs to drive payments processing at companies across Europe, Canada and the U.S.

Despite the concern from some corners that President Donald Trump’s plans to tighten ingress to U.S. borders or target remittances to pay for a U.S.-Mexico wall, Siddiqui says it's unlikely there will be a broad slowdown in cross-border payments.

“Remittance traffic hasn’t slowed down, international cross-border payments are continuing at a healthy pace and despite what Trump may say, globalization is here to stay and it’s expanding,” Siddiqui said.

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Cross border payments Remittances Cloud computing Mobile payments