Three Takeaways from the State of International Payments Report

Businesses are operating in an increasingly globalized economy. Thanks to improvements in technology, and logistics, and greater demand for products and services internationally, businesses and consumers are sending more money than ever to sellers abroad. However, this poses challenges and opportunities, as much of the international payments world faces a disjointed, slow, and often painful process in making and receiving international payments.

The State of International Payments

AFEX polled 500 small and medium enterprises to explore their experiences and approaches to manage international payments, offering insights on how to capitalize on the potential of cross-border trade.

The Continued Globalization of Business

The coming years could mean even more globalization of business, with global trade flows reaching $26 Trillion in 2012 and expected to triple between 2014 and 2024, according to McKinsey Global Institute. This means that the world will be seeing more payments across borders, currencies, and more.

Driving the globalization of business, over 40 percent of businesses make international payments more than half the time with nearly 10% completing zero domestic transactions per year. Knowing this, nearly half of all organizations intend to utilize international payments more than they did in the previous year.

Managing FX Volatility Is the Biggest Challenge

As these businesses continue to purchase and sell internationally, some of the biggest challenges they face are foreign exchange volatility (42.5%, led by 62.2% of UK businesses facing this challenge), the cost of making payments (26.3%, with 37.3% of North American Businesses driving this number higher). These two challenges are followed by ensuring timely delivery of funds, ensuring payments are made correctly, and ensuring payments are made on time.

According to an infographic on Payments Cards and Mobile, nearly 15% of businesses see fees over 3% on each international transaction, with another 19% not knowing how much they pay.

All five of these challenges, notably, are some of the strong points of virtual card numbers (VCNs), whose value is driven by FX volatility mitigation, speed of payment, and payment control and visibility.

Companies Looking for Ease of Payments from Payment Providers

Of course, many of these challenges are driven by outdated methods, which mean organizations aren’t recognizing the opportunities available to them. This could be a driving reason behind why ease of payments leads the wish list for a new solution, followed by competitive exchange rates, low price, quality of customer service, and security in funds transfer.

To learn more about why companies are rethinking their traditional payments strategies and embracing VCNs, read How Using Virtual Card Numbers Reduces the Costs of Doing Business and 5 Ways VCNs Ease Your Cross-Border Payment Pains.

What’s Standing Between Businesses and Better Payments?

Many businesses continue to maintain the status quo in payments—facing lack of visibility, immense exchange rates, slow, costly payments, and more risk—simply because they have limited time to investigate other options, and are risk-averse toward new, lesser-known providers.

With this in mind, 80% of businesses would change payment providers for a solution that costs less and 63% of businesses according to Payments Cards and Mobile would make the switch for faster payments.

Simply put, organizations want a trusted name in payments who can save them time and money. Since 1983, WEX has been a leader in bringing organizations better options for payments.

Following a successful start in fleet management, we have grown to provide international and virtual payments solutions for businesses in travel, healthcare, media, and more for businesses of all sizes across the world. Learn more about WEX here, and read the following insights to learn how virtual payments are improving cash flow, speed, and profitability below.

• Four Barriers to E-Payments Adoption (and How Virtual Cards Overcome)
• The Innovative Way To Optimize Cash Flow & Working Capital
• 5 Factors to Consider While Developing a B2B E-Payments Strategy
• Three Reasons Supplier Payments Should Be the First Thing Your Organization Changes
• When it Comes to Cross-Border Transactions, Merchants Can’t Hesitate