Cross border electronic payments have seen annual growth in their overall share of the global payments flow; what are the key contributing factors to this?

The Growth of Cross border electronic payments:

New regulation and increasing competition for the customer – not just among the banks but from a new generation of challengers – have had a huge impact on the international payments market. The latest regulations have opened up the market, allowing financial tech businesses to provide payment and banking services to business and consumer customers. On top of this, 75 per cent of global banks are retrenching from foreign geographies, meaning that the traditional correspondent banking model for cross border payments is no longer able to effectively serve the industry.

We live in the era of a networked society where everyone is connected through different devices, and this accelerates innovation. Both consumers and corporates need to operate effectively and efficiently in this digital world. Newcomers in the market, especially within the FinTech industry, have been able to step in and fill the gaps left by larger banks that no longer want to service this sector. New solutions are tackling the challenges of high FX charges, poor FX rates and slow transfer times.

It has been reported that 52 per cent of UK millennials now prefer to do basic payment activities using FinTechs rather than banks, simply because they offer a more convenient solution; the technology is easier to use. With businesses following suit and opting for the convenience and lower cost of electronic payments, market share is growing extremely quickly.


As international trade increases, businesses can capitalise on this growing marketplace; what are they currently missing out on with traditional forms of cross border bank tranfers?


The biggest barrier to cross border trade:

The traditional cross border payment model is too slow and too expensive. Each transfer is passed between a number of banks, with varying exchange rates and each one charging a handling fee. This makes cross border payments prohibitive for many businesses. In fact, in a survey we carried out in 2016, we found that 39 per cent of businesses have held back from global expansion due only to concerns regarding international payments.

New solutions are able to handle payments directly, which reduces the cost and cuts the time the transfer takes to arrive in the beneficiary’s account. Payments made between Banking Circle members can happen instantly, and at no cost, behaving like internal transfers.


What do you feel are the main factors stopping businesses changing the cross border payments from traditional means?


Lack of time is holding business back:

We have spoken to many businesses about what is stopping them from changing from traditional cross border payments methods. Generally, time and resources are the factors holding firms back from finding a better payment solution. However, some of those we surveyed were simply unaware that better solutions exist already. The fact is that often there just simply isn’t time to do the research, with lower headcount and resources stretched to capacity.

Those working in finance roles simply cannot spare the time to investigate alternative payment solutions, let alone implement big changes. Many stated that even if they did find a better solution, the business would not have the resources to implement them.


What are the key benefits of becoming a member of Banking Circle?


Financial Utilities have the answer:

Banking Circle is a global scale Financial Utility, and provides its members with banking services including accounts, FX and payments. This allows businesses to add value to their customer proposition. Fees are low, FX rates are competitive and transfer times are fast, meaning that for the first time, payments do not stand in the way of international trading ambitions.

Banking Circle offers transactions in 25+ currencies, and works within multiple jurisdictions, removing the need for multiple banking relationships to handle international transactions. Payments are made in the company’s own name, improving payments acceptance, settlement times and reconciliation. In addition, end-to-end transparency and clear segregation of funds reduces AML and KYC risk.

The ever-growing suite of solutions offered by Banking Circle, designed to revolutionise the cross border payment and banking industry, ensures businesses of all types are able to transact as cost effectively and as efficiently as possible:

Banking Circle is helping FinTechs and banks to provide their customers with faster and cheaper cross border banking solutions, without the need to build their own infrastructure or correspondent banking partner network.

As such, Banking Circle is empowering financial institutions to support their customers’ international trading ambitions, without the need for multiple banking relationships, whilst reducing risk and the operational cost of transactions. And that is enabling banks and FinTechs to remain competitive in a competitive payments landscape.