In a global economy, the ability to make borderless payments is essential for businesses and consumers alike. Moving money successfully across borders is fundamental to international commerce as it drives and sustains economies in developed and emerging markets. Cross-border payments are the oil that keeps the globalization machine going.
As the world becomes more connected, customers have more power and resources to purchase products and services from anywhere around the globe. With the rise in the number of diverse payment modes, consumers are spoilt for choice and are increasingly demanding a seamless payment experience, from global businesses. Globally, the business and commerce landscape has witnessed a tremendous shift over the past few years – from international trade to the rise of the digital nomad and gig economy as well as the sheer scale of migrant workers. In following these trends, payment mechanisms have had to overcome the constraints of international borders.
Cross-border payments in e-commerce
Since the world of e-commerce has come down to a single click, cross-border payments in the trade are gaining popularity among buyers, entrepreneurs and sellers. The conquest of geographical boundaries has resulted in umpteen opportunities, simultaneously creating challenges of credibility, security, swiftness and transparency.
Increasingly, local retailers and businesses acknowledge the sheer significance of creating enjoyable customer experiences. The surge in demand for international products among buyers has lured several new sellers into the market in catering to the end-to-end needs of buyers. Whether offline or online, each step of the buyer-seller journey is centered on elevating consumer engagement to deepen their relationship. Consequently, both local and global businesses are facing challenges in financial logistics, unabridged payment journey and payment collection to make a local payout, without having to route payments back and forth across borders. But such problems can be resolved through a combination of innovative solutions while adhering to the regulatory norms in the region.
Demystifying the travel payments puzzle
Recently, the travel industry has also witnessed a paradigm shift, particularly since traveller preferences are becoming more diverse, whether it is choosing a destination or booking a package/special tour. Having an optimum payment mechanism is imperative since it can make or break the travel experience for customers because the process comprises a vital moment in a customer’s payment journey.
Accordingly, travel providers must get it right and make the process as transparent, swift and seamless as possible for payments to their respective travel agent and other partners globally. A single inconvenient or unfavorable incident can ruin the entire experience and lead to a permanent loss of the concerned customer. Therefore, many travel providers are adopting innovative payment systems and best practices to enhance customer and partner experiences. The global travel audience has never been more lucrative as travelers from emerging markets are increasing their spending. This is a big opportunity to tap into.
Currently, travel providers can adopt payment mechanisms that permit travellers to pay in local currencies via familiar methods. It is one of the best ways for travel providers to not only grow conversions but reduce costs and increase acceptance rates. Second, the major concern travellers face is in sharing personal and financial information in an online system that deals with a local business or an overseas provider. Thanks to this, businesses need to adopt a secure, transparent payments infrastructure for customers. Third, travel-related purchases tend to be of higher value compared to other online payments.
One could be a small business in Switzerland running a local ski trip package and processing domestic payments of more than $5,000. However, in international markets, payments of this value or more are a red flag for many customers who aren’t comfortable making high-value transactions. As a business or service provider, it’s important to optimize approval rates and have different sets of controls that allow specific transactional flows.
Many small travel providers and businesses that offer niche experiences to travellers lack the financial background to set up a sustainable payment processing system and often face difficulties in negotiating costs because of low transaction volumes. It is essential to future-proof the travel industry through collaboration, which can help create a more robust and agile ecosystem that benefits all stakeholders. Partnering with a third-party provider having expertise in negotiating processing costs can simplify the complexities associated with building a payment system. Customers are spoiled for choice as many financial companies are jumping into the fray to resolve global financial logistics challenges. Collaboration with credible digital solutions and payments infrastructure providers will allow them to manage the payments journey acting almost like an extension of their internal team. Thereby, travel providers can focus on what they do best: providing best-in-class experiences.
Although cross-border payments have individual roadblocks and challenges, in the current landscape it is a blossoming opportunity for businesses, as more customers are inclined towards travelling to foreign locales. Given this backdrop, countries across geographies are gradually turning into lucrative opportunities for cross-border payments in various segments such as payrolls, remittances, e-commerce, and travel. In such a scenario, implementing customer-driven strategies and being receptive to innovative technology can help decode the cross-border payments puzzle.