Don’t let the ‘trade war’ divert attention from payments innovation
Despite a year filled with talk of trade wars and tariffs, and uncertainty around international trade agreements, the increase of globalization means that cross-border trade and payments are more important than ever before.
Whether it’s video game consoles coming to Washington or precious stones to New York, imports (and exports as well) are a vital part of local economies. Many U.S. companies both big and small rely heavily on imported goods and materials to conduct business; where would Apple be without a steady supply of computer parts and accessories coming in?
So despite whatever geopolitical trends are happening at any given moment, business as usual must continue to go on, and indeed it is vital to local economies that it does so. That’s why the payments technology that powers international trade is crucially important, because it helps streamline the processes and trim the costs of conducting business overseas.
Here are three ways payments tech can make operating a global business more efficient.
All-in-one financial relationships. Doing business in multiple overseas jurisdictions generally means doing business with any number of different banks. For accounts payable and accounts receivables groups, this involves managing multiple bank relationships, each with their own protocols and systems and processes. However, by working with a technology infrastructure that can send and convert money across many geographic regions, a business can spend less time managing bank relationships. Paying suppliers and bringing back revenue from operations abroad using one simple dashboard makes managing international business easier.
Currency exchange. Businesses have long been held hostage to the currency exchange rates determined by the traditional banks. But are banks the best place to convert currency? As The Wall Street Journal recently noted, technology has helped create upstart competitors that often can provide less costly alternatives to banks when it comes to currency conversions.
Without having the upkeep costs and legacy infrastructure to maintain that traditional banks do, fintech firms in the international payments space can often afford to offer their customers a lower spread — that is the difference between the rate banks exchange with themselves and the rate they charge customers. Lean, nimble, agile fintech firms have less overhead costs to pass along to their clients.
Faster payments. There’s been a lot of talk in recent years of enabling real-time payments and faster payments, but for many that is simply not a reality just yet. That is because the traditional “payments rails” that banks use to power payments were created in a time when batch processing was king and the speed of technology moved much slower than it does today.
By working with fintechs with state-of-the-art tech expertise, businesses can save time with faster payments and also set up currency accounts much quicker and more convenient, even via a mobile app.
New and innovative fintech firms have been disrupting consumer banking for years, but now the same level of convenience and ease of use is available for businesses, too.
While many firms still use the same old foreign exchange services — largely due to inertia more than business reasons — doing the same old thing will only leave your business behind its competitors. The old ways of getting things done are passing by, and smart firms know that exchanging currencies quickly, easily and seamlessly is key to sound business.