Both consumers and businesses, as technology has developed, have begun to rely on global payment services for a variety of uses. As the process becomes more and more digitised, fintech firms are focussed on better speeds and transparency whilst remaining just as, if not more, secure.
Discussing some of the major developments surrounding this particular type of technology in a FinextraTV interview, Gautam Pillai, head of fintech research, Peel Hunt said: “The conversation in global payments is threefold right now: much of the buzz and excitement is around embedded payments, cross-border payments and generative AI within payments”
All three of the conversation topics mentioned surround the objective of increasing a more interconnected system that works faster and serves its users more efficiently. Global payments represent a large pool of consumers who want to send money abroad - often to families - as well as businesses that use global payments within their payroll and supplier operations. As such, an effective, easy-to-use system is essential for growth and retention. Pillai explains this further:
“If you think about it - apart from these big global e-commerce vendors, you go to a normal kind of e-commerce website and you might have observed that at the time of checkout, you are taken to a different environment which adds friction to the process […] what embedded payments try to do is embed that payment experience in the website or the app and hence reduce friction for customers and increase customer retention for businesses.”
In the consumer world, many people have a need to either send money across the world to friends and families, to exchange money for travel plans or for cross-border payments to online retailers. This process requires a fast, efficient process between banks as Pillai explained:
“As banks use this technology called correspondent banking network which comes from the fact that not every bank is connected to every other bank in the world so it’s a kind of a chain network in a way. What these cross-border payment companies like Wise try to do is they use a technology called netting which kind of completely takes away the whole correspondent banking network loops and can transact directly with one person to another […]which makes the transaction a lot more faster, cheaper and transparent to the consumers.
Yet beyond the particular need of consumers for global payments, B2B as an industry requires an even larger, tighter process to match greater payments every year.
“Businesses have to transact with other businesses, you have receivables and payables in different parts of the world [...] so working capital management becomes very very important and having a very active effects, risk management and payments strategy is super critical in the current cross-border world.”
What Pillai describes is an evolving system of global payments that requires multiple technologies working together to create an interconnected process that seeks to develop more speed, greater transparency and a devotion to increasing security. As well as training GenAI to detect fraud patterns, the process of improving the consumer experience while retaining security is an ongoing battle between banks, hackers and the consumers in the middle.