FX International Payments
By Megan Doyle
Test your smarts and stay up to date on the latest changes by taking the following 10-question quiz, which recaps some of the major global payment trends of 2018.
ANSWER: False. While the use of physical cards is diminishing as the adoption of innovative virtual payment systems accelerates, that doesn’t mean physical card use will slow to a halt. In fact, an increase in worldwide financial literacy is leading to more payment card usage. Global acceptance of both physical and virtual cards is expected to grow by 40 percent over the next several years.
a) Foreign exchange rates
b) Lack of payment systems interoperability
c) Incessant fraud
d) Language barriers
ANSWER: B. A lack of interoperability between cross-border payment systems continues to make it difficult to link payment systems for international transactions. Experts say that interoperable systems would improve the efficiency of cross-border payments even more.
a) The Clearing House’s Real-Time Payments (RTP) System
b) SWIFT GPI
c) Ripple xCurrent
d) New Payments Platform (NPP)
ANSWER: C. While all of the above choices are viable real-time payment platforms, Ripple's xCurrent is the only internationally focused blockchain-based system. SWIFT gpi is a global platform but runs on its own SWIFT network service, whereas the Clearing House's RTP System and Australia’s NPP can transact only in their own domestic currencies.
ANSWER: D. Already a leader in mobile payment services, China opened the door for foreign payment card companies, a move that could make it easier for U.S.-based small businesses to trade in China.
a) Blockchain- and AI-based invoice financing
b) Real-time payment systems
c) Payment platforms such as SWIFT GPI and Ripple
d) All of the above
ANSWER: A. Fintechs are introducing services that use blockchain and artificial intelligence to help businesses, especially SMEs, sell outstanding invoices to a third party or obtain financing based on the money they’re owed. Meanwhile, new “smart” technologies could make it easier for SMEs to assess risk while speeding up the settlement process.
a) Bluetooth Low Energy (BLE)
b) NFC radio technology
c) “Invisible” payment apps
d) All of the above
ANSWER: D. All these technologies are starting to change retail transactions. NFC, a close-proximity wireless technology, allows consumers to make payments with a tap of a smart device. Meanwhile, “invisible” solutions such as BLE and smartphone apps let users simply walk out of a restaurant or store while their phone does the payment work.
ANSWER: False. Biometric systems such as fingerprint scanning, iris scanning, and facial recognition are becoming more reliable and harder to fool, and they’re already being used by some consumers in place of conventional password authentication.
d) None of the above
ANSWER: C. Payments Canada plans to officially deliver its Real-time Payment Rail (RTR) solution by the end of 2019. Australia introduced its New Payments Platform (NPP) in 2018, while Mexico’s Sistema de Pagos Electrónicos Interbancarios (SPEI) has been in effect for about 14 years.
a) Multi-factor authentication
b) Sender Policy Framework (SPF)
c) Card-Not-Present (CNP)
d) Machine learning-based systems
ANSWER: D. Payment systems that incorporate machine learning teach themselves how to detect fraudulent activities automatically, rather than rely on sets of rules to score each new transaction. That lets them adapt faster to ever-changing fraud tactics while speeding up approvals.
ANSWER: True. Bitcoin may be the “tallest tree in a forest of cryptocurrencies,” but its comparatively slow and costly payments protocol may make it hard to scale for the high transaction volumes often associated with international payments. Established cryptocurrencies that may be a better fit include Litecoin, Ethereum, Ripple, and Dash.
These quiz results show that import-export trade continues to grow easier thanks to the rise of global cross-border payments technologies that are simplifying and accelerating payments processes, but these technologies are still at an early stage of deployment and still face multiple challenges.
Megan Doyle is a business technology writer and researcher based in Wantagh, NY, whose work focuses primarily on financial services technology.