Anders la Cour, Co-founder and Chief Executive Officer of Banking Circle, looks at the role PSPs can play in breaking down trading borders by offering fast, affordable cross-border payments.
There are more than 24 million SMEs in Europe, making up more than 99% of the region’s businesses and accounting for two thirds of all employment.
Since 1990, the global production of goods has increased, roughly by a factor of three. In the same period, worldwide exports and foreign direct investment (FDI) have increased by a factor of five (according to United Nations Conference on Trade and Development (UNCTAD)). This increasing internationalisation of the global economy has also been felt by Europe’s SMEs. However, despite SMEs exporting goods worth EUR 1,757 billion – 12% of EU GDP – in 2018 (according to Source: Eurostat database Trade by Enterprise Characteristics (TEC), 2018), cross-border payments remain a challenge, especially for online retailers.
Dedicated solutions
Other providers have tried to attract SMEs with consumer products or enterprise services, but as Kent Vorland, CEO of SmartTrade App, a platform for micro-businesses and sole traders, confirms, this hasn’t worked. ‘[Consumer products] are not agile enough and providers have little knowledge of small businesses’, Kent points out, ‘equally, the big boys have complicated functionalities, but nothing optimised for small merchants’.
Payments without borders
While many barriers to international trade are coming down, through the rise in online commerce, cross-border payments are far from straightforward for SMEs. However, there are many PSPs looking to fill this gap in provision.
Phil McGriskin, Vitesse’s CEO, explains: ‘The idea behind Vitesse was to avoid the problem faced by many – often online – retailers who receive payments from customers in another country. Due to bank fees, the amounts actually received vary from the amount expected. If you’re paying an invoice, it’s difficult to know how much you need to add for transaction fees’.
Dialogues must be kept open, and innovation must continue, in order to find and develop successful, effective, affordable solutions which will work for SMEs of all types in all geographies, increasing financial inclusion and benefiting the global economy.
For copies of the latest research from Banking Circle, visit www. bankingcircle.com/whitepapers
The editorial was first published in the Cross-Border Payments and Commerce Report 2019 – 2020, which depicts the major trends driving growth in cross-border payments, cross-border commerce, and marketplaces.
About Anders la Cour
Co-founder and Chief Executive Officer of Banking Circle, Anders la Cour is a hands-on leader driving innovation to facilitate more efficient, cost-effective banking solutions. He was instrumental in arranging the acquisition of Banking Circle by EQT VIII and EQT Ventures.
About Banking Circle
Banking Circle is a next-generation provider of financial services infrastructure that is leading the rise of a super-correspondent banking network and increasing financial inclusion.
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