Where next for cross-border payments?

Why are inter­na­tion­al pay­ments such a crit­i­cal issue for busi­ness­es?

Inter­na­tion­al pay­ments can be daunt­ing and dis­tract­ing for busi­ness­es. Unex­pect­ed costs, slow trans­ac­tion times, painful process­es and rapid cur­ren­cy fluc­tu­a­tions cre­ate a drain on resources and ulti­mate­ly affect the bot­tom line.

The cur­rent geopo­lit­i­cal sit­u­a­tion, well-pub­li­cised sup­ply chain dis­rup­tion and ris­ing infla­tion have cre­at­ed a dif­fi­cult envi­ron­ment for many com­pa­nies. Cur­ren­cy volatil­i­ty and ster­ling weak­ness has only increased the chal­lenge.

Despite this, it’s reas­sur­ing to see that British busi­ness­es still have no short­age of ambi­tion when it comes to inter­na­tion­al trade. They still see an oppor­tu­ni­ty to dri­ve growth and rev­enues by work­ing with cus­tomers and sup­pli­ers over­seas.

But this ambi­tion makes the need to man­age inter­na­tion­al pay­ments even more urgent. The good news is that there are plen­ty of dig­i­tal tools and solu­tions that can help make man­ag­ing inter­na­tion­al pay­ments eas­i­er and a wealth of exper­tise to help nav­i­gate the inher­ent risk and com­plex­i­ties, sav­ing time and pro­tect­ing prof­it mar­gins.

How can busi­ness­es tack­le cross-bor­der pay­ments more effi­cient­ly?

Com­pa­nies trad­ing inter­na­tion­al­ly on a reg­u­lar basis should adopt a strat­e­gy to proac­tive­ly man­age the lev­el of cur­ren­cy risk most appro­pri­ate for the busi­ness. Pro­tect­ing mar­gins from exchange rate changes over the long term is bet­ter busi­ness than chas­ing short-term wins by spec­u­lat­ing on exchange rates.

For­ward Con­tracts are a great way for busi­ness­es to man­age exchange rate risk, by fix­ing the exchange rate for a future trans­ac­tion. In this way, For­ward Con­tracts cre­ate greater clar­i­ty on the val­ue of a deal and help to avoid any unwel­come sur­pris­es if for­eign exchange rates have changed when an invoice is due for pay­ment.

What are some of the oth­er com­mon pit­falls?

Too many busi­ness­es are still han­dling for­eign exchange volatil­i­ty reac­tive­ly, rather than adopt­ing a proac­tive approach. This can mean they’re too focused on the short term, for exam­ple chas­ing a one-off cur­ren­cy ‘win’ around a par­tic­u­lar invoice, and so fail­ing to take a longer-term approach that offers greater finan­cial gains.

By focus­ing only on one invoice or a set price, com­pa­nies end up los­ing sight of oth­er solu­tions that might well be of ben­e­fit. These could include For­ward Con­tracts or batch­ing mul­ti­ple pay­ments togeth­er to secure the rate for all invoic­es at one time.

Every cross-bor­der pay­ment is sub­ject to exchange rate vari­a­tion; it can there­fore be tempt­ing to nego­ti­ate all deals in ster­ling or US dol­lars. But in this case what’s real­ly hap­pen­ing is the trans­fer of that risk from sup­pli­er to buy­er, or vice ver­sa. The price of that risk usu­al­ly trans­lates into high­er costs of goods and ser­vices.

What does the future look like in this area?

Inter­na­tion­al pay­ments is an incred­i­bly dynam­ic space with unprece­dent­ed inno­va­tion that will improve cus­tomer expe­ri­ence and con­trol. We’re see­ing a move towards faster pay­ments and more trans­paren­cy on when pay­ments are deliv­ered, giv­ing greater con­fi­dence and improv­ing process­es for busi­ness­es.

Amer­i­can Express recent­ly launched a dig­i­tal cross-bor­der pay­ments ser­vice for US SMEs – Amer­i­can Express Glob­al Pay – enabling busi­ness­es to make secure, same-day domes­tic and inter­na­tion­al B2B pay­ments, includ­ing to UK sup­pli­ers. Busi­ness­es can ini­ti­ate Glob­al Pay trans­fers through the same mobile-friend­ly plat­form where they man­age their Amer­i­can Express Busi­ness Card account, and sup­pli­ers receive the pay­ments as a deposit in their bank account.

How else is Amer­i­can Express sup­port­ing cus­tomers?

Today, we help thou­sands of UK com­pa­nies make use of solu­tions that enable cus­tomers to make fast, secure cross-bor­der pay­ments in more than 80 cur­ren­cies and over 100 coun­tries around the world. Amer­i­can Express cus­tomers can earn valu­able Mem­ber­ship Rewards on their cross-bor­der pay­ments too.

We know our cus­tomers also val­ue the direct sup­port from our ded­i­cat­ed team of experts, who help busi­ness­es make smarter deci­sions.

For more infor­ma­tion on Amer­i­can Express Inter­na­tion­al Busi­ness Pay­ment Solu­tions, vis­it americanexpress.com/en-gb/business/international-payments

Pro­mot­ed by Amer­i­can Express UK