FX International Payments
By Elena Malykhina
Mass payments enable companies to pay multiple recipients – often more than 100 – in a single step or session.2,3 They may become increasingly important as a business grows and the volume of payments increases accordingly; a mass payment service may enable businesses to handle the payment volume with less manual effort.4,5
Though some payment services focus largely on domestic payments, there are also options for businesses that require cross-border mass payouts for business-to-business and business-to-consumer transactions. Mass payments services are used by a variety of industries for different purposes, including paying suppliers and affiliates as well as for rebates and other disbursements.
Mass payment services use a multitude of input methods. Some cross-border payment platforms use a single-point API connection to process payouts to multiple countries in different currencies. With this method, funds can be distributed directly to recipients in their local bank accounts via an online portal, in many cases routing payments to recipients using their email addresses or mobile phone numbers.6 Bank transfers may be completed in a few hours. With other services, businesses can pay hundreds or thousands of recipients at once by uploading a payments file using a secure online interface.7
Some services also combine different phases of supplier payments – such as vendor on-boarding, invoice management, payment method selection, and the payout of funds. In addition, they may produce the required tax forms or other regulatory documentation.8
Globally, electronic payments are increasing as businesses and consumers move away from cash and checks, which may help drive further use of mass payment services. According to McKinsey & Co., payments industry revenues are expected to grow at an average 7 percent a year over the next five years, making payments a $2 trillion industry by 2020.9 In volume terms, non-cash transactions are estimated to grow at 10.9 percent annually from 2015 to 2020, according to the World Payments Report 2017 from Capgemini and BNP Paribas. Growing online and mobile payments are expected to account for 32 percent of that volume, according to the report.10 Rising global business transactions may also increase the need for mass payment services, experts say.11,12
Mass payment services may use a variety of different payment networks and technologies to deliver funds to recipients, including proprietary networks and e-wallets as well as existing bank networks. The technologies used depend on factors, including the supplier of the payment service and the networks available in the recipients' countries. These may include widely used electronic payment methods such as Automated Clearing House (ACH) and wire transfers.
As an alternative to mass payments platforms, businesses may use banking services and infrastructure directly to execute B2B mass payments.13 Wire transfers are typically faster than ACH, but involve higher fees for both sending and receiving payments. ACH payments have traditionally often taken several days, but recent enhancements have resulted in same-day processing for domestic payments in some countries.14
Using ACH for international payments may involve complexities and challenges, including a lack of banking infrastructure in some countries, local differences in routing information, and manual interfaces to banking systems.15 National and regional instant payment services are also proliferating; in Europe, SEPA Instant Credit Transfer is designed to enable cross-border transfers between recipients in different European countries, with funds becoming available to the recipients' account in less than 10 seconds.16
New technologies may play key roles in how mass payment services evolve over the next few years.17 For example, many financial institutions and financial-technology (fintech) companies are exploring the use of blockchain technology, also known as distributed ledger technology. Experts say this potentially disruptive technology could enable faster, low-cost transactions with fewer intermediaries, including cross-border payments and micro-payments.18,19 In other cases, companies are focusing on adapting existing bank networks and e-wallet solutions for cross-border mass payments.20
Mass payment services provide a way for businesses to pay large numbers of suppliers or other recipients at once. Some services may support cross-border payments in a variety of currencies; in addition, they may also automate business functions such as preparation of tax forms or other documents. Growing payment volumes may further drive the need for mass payment services. New technologies, such as faster payment networks and blockchain, may play significant roles in how mass payments continue to evolve.
Elena Malykhina is professional writer who has covered science, technology and business for more than 10 years. Her work has appeared in InformationWeek, Scientific American, Newsday, The Wall Street Journal and Adweek, as well as through the Associated Press.
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18. “Distributed Ledgers in Payments: Beyond the Bitcoin Hype,” Bain & Company; http://www.bain.com/publications/articles/distributed-ledgers-in-payments-beyond-bitcoin-hype.aspx
19. What is Cryptocurrency: Everything You Need To Know,” Blockgeeks; https://blockgeeks.com/guides/what-is-cryptocurrency
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