Have you ever wondered about the real measure of technological innovation and swift changes in the world market? Take an example of how we have moved on from traditional card payment methods to swiping cards to digital wallets. While we are still stunned by the rapid adaptability, we cannot deny the need to minimize risk in cross-border payments. How we devise a solution is crucial since international trading practices are very common and contribute to the world's economy.
There is tremendous growth in cross-currency consumer payments, and it is expected to cross US$ 155 trillion by 2022. This figure includes retail payments, corporate payments, travel & tourism, etc. So much we know revolves around the intensity of these payments. While evolving around the global cross-currency payment processes is essential, we must not undermine the current issues. Cross-border payments are currently slow, expensive, and require more transparency. More so, banks need to intervene with appropriate policies to speed up the payments without costing huge on the people's pockets. Let's understand the real-time problems in cross-border payments and how we can take them from underbanked to banked and streamline the process for ease in trading.
Cross-Currency Payment Challenges
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Slow
Getting your money to reach the international borders can take a long time if you have to depend on traditional banking. The process is monotonous and has a wait time of over two to five days.
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Security
Money security is a concern in cross-currency payment channels as there is multiple handling and immense complexity. While cybersecurity is a booming concept that manages such theft, it requires the involvement of regulatory policies that can prevent any sort of damage.
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Costly
Costs involved in a cross-border payment are many, viz. intermediaries cost, conversion cost, fees, etc. They make the process immensely expensive and put the vulnerability of the financial institutions in question. Customers keep looking for transfer services to ease the time and cost burden.
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Transparency
It is obvious for customers to expect knowing what money adds up to their transfer amounts to make an informed decision about the payment channel. They require the systems to be more transparent and convenient.
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Volatility Risk
So much gets lost at the volatility of the exchange rates. It pulls down the motivation of the customer and the companies involved. They constantly keep looking for transfer services or e-payment system that is reasonable and save time.
A Now Or Never
Banks will soon have to adopt the wiser policies that some transfer services follow to not lose out on customers and trust. It is now or never time for banks to compete with the services and offer an integrated tool to enable corporate clients better manage payment risk. It is obviously tougher to move out from well-regulated traditional payment rails, but they are already en-route to associate consumer payment systems with blockchain technology.
In this endeavor, banks can redefine their services by providing consultancy to customers in deciding the instrument and currency for cross-currency payments. They can also revise their policies by looking at the best resource on decentralized finance. The idea is to make international transfers convenient and reasonable for clients and customers regardless of their locations.
Cross-Currency Payment Solutions
We know the versatility of international transfers. People working abroad send money to their kin in other countries. Some invest in properties abroad; some spend money for the education of themselves or their children; some spend on international travel while few love spending at destination weddings. All of them involve cross-currency payments. Many transfer companies like PayPal, Western Union, Transferwise, Xoom, etc., help easy commutation of money apart from banks.
The real solution lies in strategizing and adopting the best service for international transfers. These transfer companies not only charge nominal fees for the transfer in the otherwise expensive process, but they also enable customers to transfer in a range of currencies. The security aspect is dealt with very tactically by using biometrics and AI techniques like fingerprint scanners, double face scans, etc. Apart from ensuring quick money transfer in about 30 minutes to a few hours, transfer services also give options like a digital wallet, push card services, etc. Banks must also back digital currencies to keep a check on excess spending while upkeeping the factors of safety and liquidity.
The Future Of Cross-Currency Payment Solutions
Steve Jobs rightly said, "The best way to create value in the 21st century is to connect creativity with technology." Everything we see related to cross-currency consumer payment will quadruple in the years ahead. As we understand, the future is booming with technological innovation; we somehow have to channelize the payment process to give our consumers their best experiences. The vices of online payments like the currency fluctuations, exchange lock-ins, excess fees of the intermediaries must be given a tough jibe by streamlining and data monetization.
Research into how corporates and consumers behave can help the transfer companies and financial institutions to find a quick solution to these transfer problems. The demand for cross-border payment is ever increasing with remote working. Companies do not mind hiring talents from cross-borders; however, the salary suffers the exchange risk. E-commerce giants like Amazon, eBay, Airbnb have seen the rise in customer orders from worldwide. As we are falling into an interdependent global integration of services, what's important is combining the interests of the consumers and cooperative efforts of banks and payment services. The growing purchasing power of clients and companies must be given some assistance through controlling the volatility risk of such cross-currency payments.
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