In part two of our three-part series on 2019 B2B payment trends, the focus is on the promising future for cross-border payments. For more on 2019 payment trends, check out our first post on payment automation.
Potential for Payment Growth
B2B cross-border payments are thriving in today’s interconnected world. In fact, B2B cross-border transactions accounted for $125 billion in revenue in 2018, far outweighing consumer-to-business cross-border payments which accounted for just $54 billion. And this increase in demand has extended to business and leisure travel. With the global travel market continuing to grow year over year, managing the responsibilities and oversight that comes with navigating cross-border B2B payments, paying the international businesses that provide services to companies, can be one of the hospitality industry’s largest struggles.
While cross-border payments have historically been riddled with complexity, several promising deals were made in 2018 that could mean big things for cross-border payments across all industries, including hospitality.
Cross-Border Payments Milestones
One of the largest companies with a stake in cross-border payment disruption is Visa. It was reported in November 2018 that they partnered with several banks to begin testing Visa B2B Connect, an in-development platform that supports banks in providing more efficient cross-border payments. And in December 2018, Reuters announced Visa’s intention to buy Earthport, a cross-border payment processing firm for both banks and businesses. There is currently a bidding war with Mastercard, who swooped in early last year to beat Visa’s offer. There is no doubt that both companies are prioritizing new B2B payment solutions as potential answers to the issues that face current methods of cross-border payment.
While some smaller fintech companies are being purchased by larger corporations, others are working to build a bigger name for themselves within the payments industry. TransferWise has created a money transfer app that uses a matching model to lower costly currency conversion and cross-border fees. While this technology doesn’t yet translate to the B2B space, fintech knows the possibility exists.
And although cryptocurrency had a rough start, there remains huge potential in the technology to ease a lot of the long-time issues associated with cross-border payments, including speed of payment and ease of transactions. SWIFT recently announced that it plans to expand its blockchain integration, and this trend may increase over time as banks look more closely at the capabilities of blockchain.
What Needs to be Fixed in B2B Cross-Border Payments
Businesses pay a lot of other businesses, and the odds that all those businesses reside in the same country as the payor is highly unlikely today. From the payors’ point of view, currency conversion issues and time-to-pay are arguably the largest issues that need to be addressed. These issues can be eased with B2B automated payment solutions, as automation technology allows businesses to deliver payments more quickly. And the quicker a payment is made, the more likely that the conversion will be accurate.
From the payment recipients’ point of view, time-to-pay and conversion pain points also need to be addressed, but there is also a need for transparency to fees and status of payment. As payment recipients well know, tracking payment status can be particularly hard to come by when borders are involved.
Hospitality Has a Stake in Cross-Border Payments
Many travel agents and hotels attempt to juggle the burden of cross-border payments on their own, affecting both productivity and the bottom line. Mistakes made in the accounting process, particularly with cross-border payments, can create costly payment delays and poor vendor relationships. International travel isn’t slowing down either. In fact, it picked up significantly in Asia and Europe in 2019 and is expected to continue to rise.
It has been proven time and again that embracing new technology can lessen the burden of historical payment processes, but those who most need alternative methods are often the most resistant. In fact, smaller businesses are less likely to embrace the new payment innovations coming from fintech companies. This mindset can put small business hospitality professionals in a tight spot, particularly when it comes to commission payments.
The Hotel Commissions Conundrum
Hotels remain tasked with connecting the dots for cross-border commission payments, including validating stay data for foreign travelers, calculating commissions, processing payments, and sending those payments to agents in a timely manner. After the payments leave the hotel’s hands they are also subject to exchange rate issues and agent inquiries.
Once the payments reach the travel agent, there’s a new set of worries, chief among them fee-related. Large travel companies can lose thousands of dollars each year on conversion and check cashing fees. But there is a more cost-effective light at the end of the tunnel.
Working with both sides of the commission equation, Onyx CenterSource is the world leader in hospitality commission payments. We can alleviate currency conversion issues and fees through large-scale payment management.
- CommPay helps our hotel clients quickly and easily facilitate commission payment on a global scale
- Sure Pay supports our travel agent clients by consolidating commissions in the currency of their choice
The future for cross-border payments is bright, but more businesses need to get on board with innovation. Many of the big names in payments see the potential in up-and-coming fintech for cross-border payment. What about you? What’s your prediction for the future. Let us know in the comments.