For companies expanding their global footprint, demand for efficient, secure and cost-effective cross-border payment solutions has never been greater. But seamless global payments involve navigating a complex web of regulation, currency conversion and ensuring that transactions are both swift and secure. The need to avoid fraud and spiralling FX costs, as well as sidestep regulatory redlines, requires a culture that puts “money movement” front and centre, explain Anand Natarajan, Head of TMT Cash Sales and Michael Kleinsteuber, Head of Standard Chartered Prism FX, Europe and Americas.

Natarajan and Kleinsteuber begin by charting the explosive growth in global payments linked to “everywhere commerce.” The evolution of e-commerce means all businesses have a global customer base unlike in the past when companies started local, then integrated cross-border transactions as they grew. The global cross-border payments market is projected to reach over US$250trn by 2027 and US$290trn by 2030 in a landscape characterised by B2B, B2C and C2B payments amongst which payments involving consumers are rising the quickest.

Tackling the challenges that accompany global payments alongside developing solutions at scale is now a key focus for banks and fintechs. It is also contributing to a growing expectation on treasury teams to manage and service payments to ensure they are smooth.

Meanwhile the pace of change is speeding up. Witness new and important trade corridors opening between regions like Asia and Africa and China and Latin America. New markets mean corporate treasury must move money in new directions and navigate the regulatory and liquidity issues attached. “In the same way that companies think about their physical supply chains they should also think about money movement and how they are going to collect money and make payments. It involves building out platforms and the ability to change quickly,” says Kleinsteuber.

Adoption of payment corridors follow the movement of goods, he continues. Companies are adapting to regulation in new marketplaces where they are doing more business and are prepared to absorb and acclimatise to friction in payments once a particular market has reached a level of manufacturing, supply chain or customer availability that makes it important.

“Imagine a well-used dirt path that overtime gets paved over. It’s similar to a payments corridor that had friction in past, but now there is a willingness amongst companies to adapt to that friction and the payment corridor is opening up.”

Notably the shift to e-commerce platforms has accelerated demand for real time payments and adoption of supporting technology. QR-based payments for example, offering alternative payment methods that don’t require an invoice. “The seller just sends the QR code which has all the payment details,” says Natarajan.

Elsewhere mobile wallets are gaining traction for people who don’t have access to an online bank account. Instead, they send and receive money out of a mobile wallet. Looking ahead, Natarajan and Kleinsteuber expect to see an increased focus on account validation. In instant payments, it’s not possible to raise a dispute and get money back if there is a mistake, in contrast to traditional ACH payment. This finality of settlement behind instant payments flags an increased focus by treasury and payment teams on validating the account belongs to the beneficiary.

Evolution of Enterprise Foreign Exchange Risk Management

E-commerce companies are also at the vanguard of innovation in FX. Money movement is core to these companies in a way that is different to more traditional companies. To truly optimise their operations, they must focus on accounts receivable and accounts payable, FX, liquidity and hedging in a more unified way.

As these businesses mature and scale, they have built complex real time treasury systems that maintain liquidity in certain countries, net internally, and put in place innovations around internal visibility. This creates demand for FX conversion to allow for liquidity around the organisation. This trend has now moved out into retail companies working across travel and airlines, and Standard Chartered believes the trend will encompass more traditional treasuries like manufacturing and consumer businesses soon.

One area of recent innovation is multiple currency payments. For example, businesses in Africa have not been able to demand payment in local currency. Now e-commerce marketplaces can make payouts in multiple currencies. “Businesses can receive in local currency providing cost saving and transparency for all parties,” says Natarajan.

Organisations want to net as many flows internally as much as they can across the whole enterprise to do the least amount of FX and least amount of cross-border payments as possible, continues Kleinsteuber. For this reason they have put in innovations to track sales and FX real time, and push that information out to business itself. It has allowed organisations to work in a more joined up manner to enable real time liquidity management across whole organisation.

A shifting regulatory landscape

Regulation is also having a profound impact on payments as new rules come into play. Treasury teams need to ensure they are complying with global norms, and that payments are visible and transparent. The G20 is pushing for 75% of cross-border payments to be credited to the beneficiary in an hour by 2027.

Other regulation centres on privacy and data protection. GDPR in Europe and CCPA in California is shaping cross-border data flows. Elsewhere, cross-border payment linkages in Asia will tie countries including Singapore, India, Thailand, Malaysia and Indonesia under one regulatory umbrella creating an interconnected, cross-border, real-time payment system.

Regulation is also supporting innovation around CBDCs and blockchain. Project mBridge, the blockchain-based payments ledger designed to support real-time, cross-border payments and foreign exchange transactions, embodies a new level of cooperation between Asian countries and the UAE. “This is an interesting trend to watch,” says Natarajan.

The conversation draws to a close with Natarajan and Kleinsteuber signposting how technology will continue to drive change. Blockchain will increasingly support cross-border payments, enabling secure, transparent and decentralised transactions, reducing settlement times and costs and improving traceability. Digital wallets and mobile payments will increase the accessibility and convenience of cross-border payments, allowing for faster and more efficient transactions. APIs will continue to drive seamless integration between financial institutions, payment processors, and cross-border payment services and AI and machine learning will enhance cross-border payment processes by improving fraud detection, enhancing customer experience, and optimising payment routing and settlement.