Navigating cross-border payments: Insights from Mangopay

For marketplaces gearing up for global growth, what are the crucial factors they need to keep in mind while managing cross-border payments?

Around the world, national payment systems have embraced instant payments to bring speed and transparency to domestic payment networks. However, cross-border payments provide a multitude of challenges, and each corridor has its own unique challenges. While there are many moving parts in global payments, there are some fundamentals to keep in mind. Achieving success across borders goes beyond global expansion – it is about tailoring strategies to local dynamics to drive revenue. Building local payment experiences through currency coverage and payment methods is a key factor in monetising cross-border revenue effectively.

Additionally, it is important to keep treasury and financial operations in mind while managing different currencies and balancing multi-currency accounts. For instance, if you operate primarily in the UK and receive a large volume of payments from sellers in Europe, money must be transferred between accounts at the right time and cost. How are you going to make sure there is liquidity in the currencies you wish to operate in? When do you convert funds, and at what rate? This is where FX takes centre stage. An effective FX strategy adds stability to market fluctuations while converting funds from one currency to another. Overall, considerations include operational currencies, enabling local payment experiences for both buyers and sellers, and managing treasury operations.

What difficulties do platforms and marketplaces face when processing cross-border payments, and how can they overcome them?

To effectively monetise cross-border revenue, platforms must build local payment experiences. They must ensure buyers can pay in local currencies and sellers receive the exact amount, listed in their preferred currencies. Marketplace flows become more complex, particularly when multiple merchants sell in multiple currencies to a single buyer. The complexity of multi-currency transactions for buyers and sellers makes reconciling these payments and optimising costs difficult.

Cross-border payments also involve multiple intermediaries, resulting in less transparency and higher costs for both the platform and the end users. Each of these intermediaries increases processing times and costs, resulting in a complex network of exchange calculations and fees that must be carefully tracked and reconciled. This adds to the marketplace's operational difficulties, as sellers contact support to find out why they are being paid in different amounts.

It is critical to prioritise the flexibility of FX to prevent the imposition of additional hidden fees by ensuring that it is not mandatory for all funds. Platforms frequently encounter the difficulty of quantifying expenses, which complicates budgeting and planning. Transparency is important to enable users to decide when and where they want to use FX. Thus, it is essential that you work with a payment partner which has extensive experience in processing transactions across multiple currencies through various channels, while ensuring that you maintain control over your FX strategy.

How does Mangopay's new FX solution address specific challenges in cross-border payments for marketplaces and platforms?

Recognising the need for efficiency while minimising costs, Mangopay's end-to-end FX suite enables platforms to drive global growth by simplifying cross-border payments. Built on our e-wallet infrastructure, platforms and sellers can use e-wallets to collect, hold, convert, and manage currencies. With multi-currency e-wallets, FX is not confined to a specific point of pay-in or payout, equipping platforms with the flexibility to leverage FX at any stage in the payment flow.

Mangopay’s FX offers both Spot FX for real-time exchange rates and Guaranteed FX for locking rates for a brief period, enabling platforms to tailor FX flows for both user and platform funds.

This also extends to enabling platforms and their sellers to optimise conversions and reduce checkout churn by implementing multi-currency pricing. This, in turn, simplifies the process for both buyers and sellers, as buyers can shop in their local currencies, while sellers receive the exact amount listed. Additionally, platforms can leverage FX to apply markups and margins, enhancing monetisation opportunities.

At the same time, Mangopay's end-to-end FX makes managing liquidity and treasury easier. By lowering reliance on third-party integrations and optimising payment processes, it is possible to convert platform funds in real time through integrated FX capabilities. This not only improves the control and efficiency of treasury operations but also enables the seamless reconciliation of multi-currency payments.

What can we expect from cross-border payments in 2024?

We expect the cross-border payments landscape in 2024 to be characterised by a commitment to speed, efficiency, transparency, and enhanced user experiences. Some anticipated developments include:

To find out more about navigating cross-border payments, visit mangopay.com/products/fx.

This editorial piece was first published in The Paypers' Cross-Border Payments and Ecommerce Report 2023–2024, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally. 

About James Butland

James Butland is VP, Payment Network, at Mangopay, having joined the company in 2023. Prior to Mangopay, James spent six years at Airwallex, setting up its European entity, payment network, and operations. He has also worked for TransferWise (Wise) and Man Group, the UK-listed asset manager.

About Mangopay

Mangopay empowers the platform economy with its modular payment infrastructure. Created in 2013, Mangopay has supported 2,500+ platforms and marketplaces. Built around its programmable e-wallet solution, Mangopay’s end-to-end infrastructure covers platform payment needs, from pay-in to payout, for many platform business models and workflows. In March 2023, Mangopay was named Best Platform and Marketplace Provider at the Merchant Payments Ecosystem (MPE) Awards for providing best-in-class payment services to marketplaces and platforms, and, in October 2023, it was named one of FXC Intelligence’s most promising cross-border payment companies.