Payment and FX to keep up with global ecommerce, Banking Circle interview

Friday 30 September 2022 09:00 CET | Editor: Raluca Ochiana | Interview

What is being done to bridge the gap that still exists between what businesses need for cross-border payments and FX to capitalise on the growing ecommerce market, and what they are able to access?

The lack of accessible solutions for cross-border payments and foreign exchange (FX) has been a hot topic for some years. In fact, tackling this issue was the driving force behind the creation of Banking Circle around ten years ago. The bank’s Global Head of FX Sales, Nick Tubb, joined The Paypers to discuss what has – and hasn’t – changed in that time, and what can be done to mitigate the risks and costs.

As an industry, we expected cross-border payments to be ‘fixed’ by now. Has anything really changed to make international commerce easier for businesses and the banks and payments providers serving them?

Global ecommerce has exploded far more quickly than anyone could have predicted. COVID-19 had a dramatic influence, and new technology has fast-tracked innovation in ways we couldn’t imagine when Banking Circle first launched. 

In response to this rapid evolution, cross-border payments and FX have improved significantly. Competition has increased thanks to money transfer companies joining the market, leading to higher expectations from a customer point of view. FX is much cheaper and settlement much faster today than 20 years ago. However, there is still a gap between what businesses need and what they are able to access.

What is causing this gap?

Traditional FX and cross-border payments solutions are too slow and expensive, so do not meet the needs of businesses and payments providers in today’s rapidly changing and highly competitive global market. New solutions from disruptors, FinTechs and other non-bank financial institutions (NBFIs) have improved solutions available, but most are focused on fixing problems faced by retail banking customers, not businesses. So far, innovation in B2B cross-border payments has not been able to keep pace with industry expectations. 

One major challenge is transparency. When businesses, smaller banks and non-banks look at sending money across borders, the costs, charges, and timeframes involved are not always clear. This is worst when payments are made via credit cards or offline payment methods, as the settlement times are longer, increasing the chance of exchange rates changing significantly before the payment reaches the recipient. The associated risk is currently heightened, due to the FX volatility caused by the ongoing geopolitical uncertainty.

Why do cross-border payments not ‘work’ well enough for businesses?

When cross-border payments go through the traditional correspondent banking network they can incur unnecessary and unexpected costs and delays. Depending on the location and currency of each bank handling the payment, the transfer may incur multiple FX charges as well as cause adverse financial impact due to poor FX rates and delays associated with the various regulatory obligations within the journey. 

For example, a British company placing an order with a Danish company whose bank is based in Belgium: the banks handling the payment may add a conversion from Pounds to Euros, then convert again to Danish Kroner – an unnecessary step that adds a conversion fee and potential to lose out on poor exchange rates. 

These costs must be absorbed by the business or passed on to customers, making businesses less competitive and reducing profitability – reducing the cost of cross-border transactions is vital to remain competitive. Instead, the Danish company could hold an account in Denmark denominated in British Pounds, entirely removing the need for currency conversion and its associated costs and delays.

What can businesses and their payments partners do right now to improve their cross-border payment offering? 

Most global ecommerce businesses are expanding into new geographies and seeking to offer an optimal customer experience. They want to provide their customers with a familiar checkout process, in the right language and the right payment methods to suit local preferences. They also want to offer payments in the customer’s local currency, but this brings with it foreign exchange (FX) volatility risk and operational inefficiency, deterring many businesses, especially those with smaller cross-border sales volumes. This limits their potential. 

When it comes to improving international transactions services, knowledge is the most powerful tool available. The latest Banking Circle white paper, ‘Optimising FX and Cross-border Payments’, offers insights on what businesses, banks and payments providers need to know. The best thing payments providers can do is gain a full understanding of the entire process and all parties involved. Knowing who is involved in the transaction, where they and their bank accounts are based and all regulatory requirements that will apply will help payment specialists select the best process for the transaction. This will also give a clear idea of the transaction settlement times and risks in order to know what to expect and plan accordingly.

If research is all it takes, what is holding the industry back?

It all comes down to stretched resources. Unfortunately, not many businesses have the time required to dedicate to acquiring and maintaining this level of knowledge and understanding in-house. And developing new solutions on the back of that knowledge requires even more investment.

Instead, businesses and payments providers should choose a cross-border payments partner who can handle this on their behalf. Working with third-party expert providers allows financial institutions to fast-track improvements without the need to build new systems and solutions in-house. As part of Banking Circle’s strategy of building an interoperable financial services ecosystem, we offer payments providers access to tech-driven services to allow merchants and businesses to sell in any currency without the worry of FX volatility. They also enjoy expedited settlement so they can access their cash as quickly as possible.

Financial institutions should keep in mind that reducing or even eliminating FX exposure risk will be a real value-add for merchants looking to sell cross-border. Faster, simpler, lower-cost cross-border payments will open up competition still further and give businesses the international opportunities they need to compete and thrive in the new landscape. 

About Nick Tubb

Nick has 25 years of experience in commercial roles in high growth sectors and geographies in the payments space. Before joining Banking Circle, Nick worked in the digital commerce management team at Worldline (formerly Ingenico / Global Collect) where he held overall responsibility for global revenues. Prior to that he spent more than a decade in non-bank commercial FX, leading business acquisition and growth teams, and has experience working in the UK, North America, Australia, Singapore, and the Netherlands, as well as running operations in Europe and Scandinavia.

About Banking Circle 

Banking Circle is a fully licenced next generation Payments Bank, designed to meet the global banking and payments needs of Payments businesses, Banks and online Marketplaces. Banking Circle solutions power the payments propositions of more than 200 regulated businesses, Financial Institutions and Marketplaces. 

Banking Circle, the next generation technology-led Payments Bank, launched its Banking Licence in February 2020.  Banking Circle is wholly focused on delivering a payments solution for Payments businesses and Banks that is invisible to end users but will enhance their customer proposition – without upfront investment in systems or process changes. 

Learn more at

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Keywords: cross-border payments, fintech, payment methods, FX , financial institutions, ecommerce, Banking Circle, money transfer, banks
Categories: Payments & Commerce
Companies: Banking Circle
Countries: World
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