When Visa acquired Currencycloud in 2021, it was a signal of intent by the global payments giant that it was seeking to significantly broaden its scope of cross-border payments.
This relationship between the two parties ultimately led to the launch of ‘Visa Cross-Border Solutions’, only cementing the commitment Visa and Currencycloud have to empowering companies of all sizes by integrating new methods to enhance transaction speed.
Piers Marais, Head of Product of Visa Cross-Border Solutions, spoke to Payment Expert on the relationship between Visa and Currencycloud and why there is a need now more than ever for seamless cross-border payment solutions.
Payment Expert: Firstly, what were the key motives for Visa and Currencycloud joining forces to launch ‘Currencycloud/Visa Cross-Border Solutions’?
Piers Marais: Visa first invested in Currencycloud in 2020, at which point we immediately began working together on cross-border solutions, including Weekend FX. But both parties knew there was much more we could achieve together, and we were fully acquired in 2021.
Both Currencycloud and Visa recognised that traditional modes of cross-border money movement are all too often laborious, costly and lacking in transparency. And while we solve problems for other businesses, we’ve always been laser-focussed on the end-user experience.
With Visa Cross-Border Solutions, we’re building tools that are suitable for the kinds of companies we work with – all of which are held to high standards on compliance, security, and customer experience.
PE: What are some of the glaring examples of small businesses experiencing difficulties in accessing international payment services and methods?
PM: Most glaring perhaps is the lack of agility that banking systems often have. Small businesses have rightly become accustomed to having quick access to a range of tools and services, and international payments should be no different.
However, the current system is bogged down by complexity, cost and chronic delays, making access to traditional cross-border payment services difficult. Foreign exchange pricing can be opaque, and setting up international payment gateways often comes with a mass of bureaucratic red tape and requirements for documentation that small businesses just don’t have, such as years of banking history and details of collateral which many lack due to being service-based.
Not only are SME’s leaner teams less able to dedicate time and resources to navigate these challenges, these businesses typically also deal with smaller transactions. These can incur a relatively higher fee as a percentage of the total compared with larger corporates, whose scale offers them better rates.
But the speed at which traditional banks can serve small businesses is the real sticking point. Many may have to wait in excess of six weeks for a decision to be made, at which point hearing a ‘no’ means wasted resource and a stunted working capital cycle, and having to begin back at square one.
In a best case scenario, those who do access international payments do so with a low level of credit and high costs and fees. This cost and complexity means that small businesses lack confidence in selling internationally. Our research finds more than a quarter (28%) of businesses not already exporting overseas have plans to do so in the future but concerns around international payments are preventing them from taking the plunge.
PE: In a world where cooperation between banks and fintechs has begun to improve, how beneficial can this be for smaller businesses to access cross-border payment capabilities?
PM: The benefits can’t be understated. Effective collaboration between banks and fintechs means that the customer experience can be tailored depending on the nature of an organisation’s end-user, whether they be an individual who requires competitive and transparent FX rates when sending remittances to family abroad, or an SMB that wants to receive payment from an international customer without hidden or opaque fees.
PR: Why has it become more vital than ever before for a business, no matter what size, to be able to facilitate and send transactions in multiple currencies?
PM: In today’s globalised economy, being able to transact in multiple currencies is increasingly more than just a ‘nice-to-have’ but almost a necessity for businesses of all sizes. For SMEs, this capability unlocks access to global markets, a massively expanded customer base and improved prospects for businesses looking to grow. As with consumers, there’s an escalating expectation to pay in local currencies without worrying about unfair exchange rates.
This shift is not just about expanding operational capabilities; it’s about aligning with the evolving landscape of global trade and consumer preferences, ensuring businesses remain competitive and relevant.
PE: What is the importance of foreign exchange rates when it comes to cross-border transactions and why should businesses be wary of them?
PM: Foreign exchange rates are central to cross-border transactions. Unpredictable currency fluctuations can pose significant risks to businesses, potentially eroding profit margins or even turning a profitable deal into a loss if not properly managed. SMEs, with their tighter margins, can be particularly vulnerable to these risks.
Another element businesses should be cautious of are the high transaction fees that can be incurred when making cross-border transactions. These are often hidden and can mean a firm sends or receives less money than they believed they did, with fees swallowing up a larger portion of the overall amount than they might have expected.
To combat this, businesses need tailored solutions. To manage FX risk and unexpected fees, locking in favourable exchange rates or hedging strategies can protect against adverse market movements. In response to opaque pricing, transparent, real-time FX rates help enable cost forecasts, better-informed decision-making, and a robust bottom line.
PE: Could you explain how central bank digital currencies (CBDCs), if they become a reality, can rapidly accelerate the multi-currency transaction process.
PM: Many central banks are currently investigating risks, benefits and various designs of CBDCs, but with a strong focus on domestic needs. If coordinated successfully, however, CBDCs could quite possibly be leveraged to enhance cross-border payments and solve the cost, speed and transparency issues associated with them. But to do so may require different degrees of international integration and co-operation, ranging from basic compatibility with common standards to the establishment of international payment infrastructures.
But before we can even think about the impact CBDCs might have on multi-currency transactions, there are a host of other considerations to address: for example, regarding the interoperability between existing and new infrastructures, the access to and control of central bank money, the distinction between wholesale and retail CBDC and the role of private industry actors, amongst others.
PE: Lastly, and thank you for your time, what product and service launches can we expect to see from ‘Currencycloud/Visa Cross-Border Solutions’ throughout the year?
PM: We’re committed to streamlining access to global markets with cost-effective, clear, and fast payment solutions, designed specifically to address hurdles. With multi-currency wallets and real-time transparent and competitive FX rates, we’re working to help businesses have clarity and control to execute their cross-border strategies with confidence.
We recently received an in-principle approval (IPA) for a major payment institution (MPI) licence by the Monetary Authority of Singapore – a significant step for us, which means customers in Asia Pacific will have the ability to collect, convert, hold, send, and spend multiple currencies simultaneously across 180 countries and territories.
Our customers in the region will soon be able to process intra-Asia and east to west payments more quickly and seamlessly and it’s this level of efficiency that we are looking to roll out to customers globally.
