Top 3 Fintech Alternatives to Streamline Cross-border B2B Payments

By 2022, B2B cross-border payments are expected to be valued at $35 trillion, representing a healthy 30% growth over the 2020 value of $27 trillion. Goldman Sachs is even more optimistic about the upward-moving trajectory of the B2B payments market, estimating that it will reach $200 trillion by 2028.

Digital B2B Payments for Growing Businesses: Slow Past, Bright Future

Over the years, the B2B and B2C payments sectors have not adopted digitisation at the same pace. In fact, research shows that only one-third of total B2B global payments are processed electronically versus two-thirds of B2C global payments.

Several factors have contributed to this lag. One is that B2B payments are usually tied in to complex business processes which often require manual effort. The complexity of these processes can be lowered through automation and ERP software. However, such platforms are too expensive for growing businesses – one reason why 80% of their invoices are still manually processed and paid for by cheque.

The good news is that investment in the FinTech-fuelled B2B payments space is increasing. This has opened up the market to disruptive innovation and growth that will benefit many businesses, especially SMEs. Digital adoption will supercharge payments transactions across geographical borders. They will give growing businesses greater mobility, flexibility and security in uncertain situations, enable them to align with their suppliers and customers on payment terms and credit, and increase visibility into their cash flow positions.

Here are three convenient, affordable and user-friendly FinTech alternatives to streamline B2B payments.

#1. Global Collection and Receiving Account

For cross-border businesses, a global collection and receiving virtual account provides a simple, low-cost alternative to foreign bank accounts. This account can be operated like a local currency bank account to receive payments from international customers.

Unlike foreign bank accounts and interbank transfers, this account does not burden small and growing businesses with unfavourable exchange rates or additional charges. This enables sellers to reduce their FX losses, improve their cash flows, and increase their productivity. There are no fees for incoming funds, with account owners only charged a small amount when they make a withdrawal or payment from the account. Furthermore, the account also benefits buyers in different geographies, allowing them to pay the seller in their preferred currency using their local transfer methods without incurring expensive charges on international transfers. All in all, a global collection and receiving account simplifies cross-border payments, and allows companies on both sides of the equation to grow and prosper.

The Wallex global collection and receiving account enables businesses to collect funds in multiple currencies like USD, GBP, EUR, IDR with no charges. They can reduce their exposure to exchange rate fluctuations, and save on multiple conversion fees. Since there are no minimum balance requirements and no bank charges, they can improve their cash flows, and reduce their working capital needs. For easy funds management, they can centralise all collections into a Wallex multiple-currency easily wallet, and even connect their balances to other cross-border tools for international payments and FX conversions.

#2. Multi-currency Account

A multi-currency account, sometimes called a foreign currency or borderless account, simplifies the way businesses make and receive payments to and from foreign entities. With this account, businesses can send or receive foreign currencies at much lower cost compared to regular international bank transfers. It reduces the risk of losses due to exchange rate fluctuations, and offers “rate spread” due to the timing differences between incoming and outgoing (multi)currency flows. Account holders can also hold multiple currencies in the account and leave them there when the rates are not in their favour, and convert when they are.

Designed to simplify FX based accounts receivables and streamline cash flows, the multi-currency wallet from Wallex is ideal for businesses that receive money from abroad on a regular basis, or are looking to save their funds in foreign currencies. They can easily hold, convert and pay using 14 currencies while managing FX risk, and saving on FX transactions over time, especially when trading large volumes. Offering competitive, mid-market exchange rates, the account is a powerful, low-cost way to hedge against volatile FX markets, and make the most of cross-border business opportunities

#3. Virtual Cards

Virtual credit cards are another FinTech innovation that are simplifying cross-border payments. Driven by increasing mobile device usage, these cards – essentially a 16-digit number – enable one-time purchases at set amounts. They offer enhanced convenience, security and speed, making them ideal for B2B payments.

For SMEs, ePayables with virtual cards can be easily integrated into their B2B operations, allowing them to streamline their payments, control and manage their cashflows, and optimise their working capital. Virtual cards also offer more safeguards against potential fraud, compared to traditional business credit cards. Payments with such cards are executed and settled instantly. They are also easily trackable with Virtual Card Numbers (VCNs). All these advantages help strengthen business relationships, which ultimately benefit both buyers and suppliers.

Conclusion

Old-fashioned cross-border payments methods are no longer adequate to meet the needs of growing international businesses. FinTech provides three great alternatives to these expensive, slow and inefficient methods: global collection and receiving accounts, virtual IBANs, and virtual cards. SMEs that adopt these new methods will be able to take advantage of frictionless payments, get better control over their cashflows, and participate more efficiently in cross-border trade.

Explore the global collection and receiving account from Wallex and enjoy the benefits of a faster, cheaper and more convenient cross-border payment method for your B2B operations. For more information, visit Wallex or talk to our FX expert.