Challenges across national borders cost a lot, but there is a simple solution
Cross-border payments are complex – how many times have you read that before? But how complicated and costly are these challenges?
Each country has its own set of regulations governing financial transactions. For example, some payment destinations have no capital controls, making funding easier compared to those that impose additional restrictions.
Government guidelines may also change, forcing payment service providers to relaunch payment corridors that became unknown.
Navigating regulatory differences costs a lot. Leading professional services firm Deloitte reported that compliance costs have increased by 60% for financial institutions.
That’s not all, the Bank of International Settlements, in a report to the G20, noted that regulatory constraints hindered the implementation and standardization of application programming interfaces (APIs) in payment systems.
APIs are one or more pieces of software that allow different payment systems to talk to each other and perform specific functions based on instructions or requests. A lack of standardized APIs means these systems cannot communicate effectively with each other, leading to slow transactions.
Cyber Security Risks
As most payments are now digital, cyber security is another major concern, especially for financial institutions. According to the 2022 AFP Payments Fraud and Control Survey, 71% of organizations were victims of payment fraud attacks or attempts in 2021.
Cyber attacks cost millions of dollars in monetary and reputational damage. The 2016 Bangladesh robbery is perhaps one of the largest known cyberattacks involving a financial institution. In the heist, hackers sent false transaction instructions via the SWIFT payment network and obtained $81 million.
In 2017, hackers stole $6 million from a Russian bank in another attack using the SWIFT system. In August, Cybersecurity Ventures predicted that cybercrime will cost $7 trillion in damages this year.
Preventive measures in themselves are not cheap either. By 2021, tech giants Google and Microsoft pledged $10 billion and $20 billion, respectively, to boost cybersecurity.
Consulting firm Gartner predicted in a recent report that the world will spend $188.3 billion (+11.3%) on security by 2023. This increase in spending eats into budgets and affects costs.
Payment solutions can help
Here’s a shocker: cross-border payment challenges cost a lot, but you don’t have to overcome them yourself.
Why invest millions in building networks and infrastructure, negotiating terms and maintaining an in-house team to handle your payments when you can get specialist help?
Just make sure they follow these best practices.
Best cross-border payment practices from Tranglo
To learn more about how the right payment solutions can help your business overcome cross-border challenges, visit www.tranglo.com
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