Innovations in Cross-Border B2B Payments: How Fintech is Changing the Game

Invention is a funny thing. Sometimes something new enters the world and completely changes how we live in an instant. More frequently, however, innovation sneaks up on us, and one day we look up and find the world has altered around us.

With international banking, the fintech industry has been developing a new infrastructure to facilitate worldwide B2B payments, leveraging and changing centuries-old payment rails into high-speed train counterparts. If you haven’t looked, you may not realize how much has changed.

1. Instant worldwide payments

‘The cheque is in the mail’ should be relegated to the trash of history as an excuse for late payment. While companies continue to use checks (about 50% in both the US and the UK), the fact is that checks are an inefficient payment mechanism prone to fraud.

Modern payment rails such as Transferra enable businesses to make worldwide payments as if they were depositing funds straight into the payees’ bank accounts. While immediate payments often involve some initial setup time, this advancement enables firms to better manage their cash flow, strengthen supplier relationships, and increase traceability.

2. Real-time detection of fraud and money laundering

Fraud has always been a major concern when it comes to B2B payments. Fraud costs organizations billions of dollars each year, whether it is from an outside group penetrating the payment process or inner criminal conduct.

Automated fraud detection is a key component of the new generation of fintech solutions, which uses built-in criteria to identify suspected fraud and alert the account owner promptly. Anti-money laundering protection is a critical component of these detection systems, checking for suspect transactions and movements of money.

3. Transparent transfer of funds

Good communication between suppliers and customers is always essential for a seamless operation and an efficient supply chain. Previously, money flowing across borders would vanish into thin air as it passed via regular banking channels before reappearing on the other side.

Modern methods enable both the payer and the payee to follow the money from the time it is paid until it arrives. Unlike typical payment systems, the amount paid matches the amount received.

4. Significantly minimize banking costs

Money flowing by conventional trains was also subject to banking fees. When money is sent via many banks, as is frequent when paying overseas, each bank may charge a portion or fee for the transaction.

Modern FinTech payment rails avoid these processes and just utilize the rails put up by the FinTech provider, so the amount sent equals the amount received.

5. Reduce FX risk and costs

While the money was passing through various institutions, it might have also been going through multiple nations. This implies that the funds are susceptible to FX costs and negative currency changes.

Again, the final result was that sometimes the money paid did not match the money received, causing major issues for finance departments trying to figure out how much they needed to transfer through the chain in the first place.

All of this is no longer necessary thanks to modern fintech technologies. Because of the infrastructure in place, near-instant payments imply that a finance professional making a payment via the network knows that the money is not subject to any of this movement, and hence is not exposed to any FX risks.

6. Procure to be paid

Businesses may now make money on FX transactions by working with fintech payment providers, which is a clear indication of how the conventional global B2B payment model has been turned upside down. Because of the worldwide infrastructure that the fintech business has established, they may pay partners a fee on international payments and FX margins.

This implies that overseas payments become an extra income source for the company rather than a direct expense.

7. Making massive, automatic payments that are readily reconciled

Another issue that fintech has addressed for finance departments is the ability to transmit large amounts of money. Previously, this might have been a time-consuming and error-prone operation.

Businesses can now make large payments in batches, with the automated solution dramatically decreasing administrative time spent reconciling payments and documenting invoices across different platforms.  

8. Connecting systems via API integration

One of the core issues of the global payments system is the need for various systems to communicate and interact with one another. Indeed, the development of technology has added layers of complexity to this, with different suppliers and facilitators using various methods. 

Today, API integration enables fintech organizations to integrate various payment systems, resulting in efficiencies across the chain and for those managing them. While they might be difficult to get off the ground, the cost and time savings that firms can realize once they are up and running can be really game-changing.