Western Union works to enable smaller payments on a bigger scale

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Cross-border transactions are getting smaller in size and more frequent, rendering the correspondent banking model increasingly obsolete as new use cases pile up.

For corporate travel and entertainment reimbursement, Certify and Western Union on Thursday teamed up to provide international payment capabilities for Certify's expense and invoice customers with needs outside the U.S.

Certify can use Western Union's scale to offer mutual customers the ability to directly remit employee expense reimbursements and vendor payments directly to employees’ bank accounts in a range of currencies for both domestic and international transactions.

The Portland, Maine-based Certify's existing ACH product allows corporate clients to reimburse staff for mileage, travel, and other reimbursable work expenses. The product operated primarily in dollars, and the Western Union integration will permit an ACH-style experience for more than two dozen other countries, according to Certify CEO Robert Neveu.

Certify's network includes business expense products such as Nexonia and Tallie, with a base of more than 10,000 companies in 90 countries. Western Union's Mass Payments API powers the product, called Certify Payments, which can process electronic "direct to bank" payments in 45 currencies. All mutual Certify-Western Union customers can use the integration, which enables processing in each currency in accordance with each country's clearing system, including settlement times and other factors.

The upgrade is designed to serve companies that are increasingly relying on an international workforce and freelance "gig economy" contractors. The integration automatically performs currency conversions, allowing for the use of local currencies on both ends.

"A company can determine the dollar amount for a group of workers that may be in Canada, the U.K. and France and hit the reimburse button," Neveu said. "And that does require that each client have a bank account in each of those countries."

Removing correspondent banks is a goal of most new international payments initiatives, as cross-border payments become more frequent and smaller in size — a different model than the correspondent banking system that assumed large, infrequent B-to-B transfers. Certify and Western Union's fees for their service would likely be less than a traditional international payment.

"A lot of these T&E expenses are small, so the fee for the wire transfer tempts companies to just wait until they have a larger number of expenses," Neveu said. "There's now a way to do each transaction for a lower fee."

In addition to Certify, Western Union has extended its reach into other emerging payments innovations to complement its network, including Facebook Messenger and in-app mobile transfers via Apple Pay.

"International transactions are difficult and expensive because banking systems are localized by country, so there’s no cross-border ACH system that can easily move the funds," said Rick Oglesby, president of AZ Payments Group. "It’s difficult to verify funds availability as well, which means long wait periods for the funds to clear."

A network like Western Union solves that problem by having a global presence that enables it to verify funding availability in the source country, and therefore deliver the funds seamlessly at the destination, Oglesby said.

"Those funds can therefore be delivered to anyone that is capable of receiving a Western Union payment at the destination," Oglesby said. "The API integration helps verify funding availability at the source."

The collaboration is another venue in which Western Union can use its scale and technology to offer extended cross-border payment services. That market has become quite competitive, as companies such as R3 and Ripple line up bank support to build international services that work faster and with less expense than traditional correspondent banking relationships. In Certify and Western Union's case, other companies such as IBM are pursuing that market.

The Western Union-Certify effort is focused on B-to-B transactions, which are a massive part of a country's economy ($18 trillion in the U.S. alone), much of which is still paper, Oglesby said. "There are many companies working to solve this problem," he said.

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