This is an interesting time of transformation in the cross-border payments space. The industry is faced with a range of complex issues and increasing pressures in the global enterprise payments space. The challenges encompass everything from regional compliance, regulatory issues and high costs, to settlement risk and lack of transparency.
Over the last decade, a myriad of startups have jumped into the electronic payments space; resulting in fragmented solutions which often only target a specific region, market segment or method of transacting across borders. Regardless of the offering, most payment service providers are still using the bank’s ‘rails’ for cross-border transactions.
The reason why these alternate channels have come to exist are a combination of high transaction and FX costs, in addition to settlement inefficiencies. Why does a transaction take three days to settle in one region and two days in another? There is lack of transparency and clarity in determining real transaction costs.
So what is changing? At PayCommerce, I envisioned a bigger and holistic global opportunity to address all of these key challenges through a single, centralized cross-border network. Our network makes cross-border transactions more compliant, cost-effective, transparent and efficient. Our network is designed to manage low-value; high-volume payments for faster settlement. For high-value, low-volume transactions, traditional channels are still a viable channel.
As the industry changes, the transaction model needs evolve. Banks now have an opportunity to drive new business revenue from the PayCommerce model. Additionally, the cross-border business has higher margins because of the cross-border trade and Forex opportunities. Realistically, it is a natural evolution that some cannibalization (within the traditional channels and cross-border business) can occur.
At PayCommerce, we have a clear leadership role in the transformation of cross-border payments. Our firm is innovating a model that will ameliorate the challenges in the cross-border, faster pay space. My vision is that our model breaks down barriers and maximizes the velocity of global trade and commerce in order to open the industry to new opportunities and models.
Executive Chairman and Founder, PayCommerce