Thanks to ecommerce, shoppers have never had things so good. With just a few clicks, we can search and pay for items from merchants and marketplaces located pretty much anywhere in the world. Most businesses have gone out of their way to make this a seamless experience for customers in order to deter basket abandonment and drive customer loyalty. 

However, as anyone with even a cursory understanding of what goes on behind the scenes of cross-border payments knows, this simplicity is an illusion. Behind every international transaction is a highly complex process involving more moving parts than most businesses are comfortable with — particularly if they lack the scale and resources to justify a dedicated payments team. And let's not forget, every minute spent managing complexity is a minute not spent on core business activities.

Why are cross-border payments so complex?

The root causes of complexity in international payments are fairly universal. On a basic level there's the simple fact that most cross-border payments involve a large number of interconnecting tasks. First, there's payments acceptance: the systems and processes required to enable an ecommerce business to accept payments from its international customers. Then there's the need to set up settlement accounts: dedicated accounts where funds from completed transactions are held temporarily before they are transferred to a merchant's primary bank account. Finally there's payouts: the process of distributing accumulated funds from the settlement account to intended recipients such as the merchant's bank account, suppliers or other stakeholders.

Underpinning these three basic functions are a whole raft of global and local payment rails (the underlying systems and processes that facilitate the transfer of money). Ordinarily, only the world’s biggest businesses can get access to, or fulfil the compliance requirements of global solutions capable of enabling payments for all markets. This means that most ecommerce businesses stitch together a complex patchwork of technologies and providers that they then need  to manage on an ongoing basis. The number of partners businesses must work with quickly multiplies as they grow. What was perhaps three or so partners for the UK quickly becomes six for the US, then the same for the Eurozone and then perhaps more for Scandinavia, and that’s before you approach LATAM, APAC and MEA. 

And then there's the fact that each local payments system operates in a unique jurisdiction with its own rules and regulations. Throw into the mix fluctuating exchange rates and time zone differences (which can impact settlement times) and suddenly there are a lot of plates spinning before a payment can be completed. And, that's before we factor in the proliferation of payment options such as digital wallets or local systems such as UPI in India or Pix in Brazil. International payments are not for the faint hearted. 

Why does complexity in cross-border payments matter?

All this complexity is a problem because it directly affects operational performance. As already touched on, businesses — especially those looking to expand into new markets — rightly want to focus on their core competencies, not on managing unwieldy back-office systems, processes, and relationships. 

Business agility also suffers. As in all things, complexity adds friction. Whether it's needing to integrate with a multitude of systems using scores of APIs, or transacting payments processes via a growing list of intermediaries, complexity slows things down. It also increases costs, for each new partner or intermediary will require a slice of the action. All of this means that businesses are unable to benefit from economies of scale – as they grow, so too does complexity, cost, and inefficiency. 

It also increases the chances of payments going awry alongside the difficulty of locating and correcting them, which can present a serious reputational risk to the average ecommerce brand. 

Curating a simpler approach to payments 

This is where payments curation comes into the picture. Payments curation is an infrastructure approach that simplifies cross-border payments for ecommerce businesses. It replaces the tangled mess of systems, APIs, contracts, regulations, and partnerships. 

Payments curation provides merchants and marketplaces with the ultimate in simplicity for all their international payments: one API, one platform, and one contract. It enables businesses to benefit from better  quality processes and fewer steps from merchant to local bank accounts, taking care of all the compliance and currency conversions along the way. So, ecommerce business can get back to what matters most: winning new customers and growing in new markets. 

Through payments curation, businesses are also able to dramatically reduce costs. Most global marketplaces, for instance, hold upwards of seven different banking and payments relationships with unoptimised pricing that ties up capital and resources. Conversely, businesses using payments curation solutions have just one connection for accessing best-in-class payments products across the full triad of payment acceptance, settlement accounts, and payouts, and with prices optimised across the board. 

A consumer-grade experience

Over the past 20 years consumers have benefitted from the fruits of payments innovation. Their experiences have become simpler and more convenient as a result. Now, finally, the focus is shifting to merchants and marketplaces. Innovations like payments curation promise to make international expansion easier and cheaper for ecommerce businesses. They will be able to tap into economies of scale knowing that, no matter how many markets they move into, they will only need that single API, platform and contract. Firms that embrace payments curation can consign complexity to the past and steal a march on their competitors.