Zeb Winzenried, Senior Director, Testing Services, Applause
Today, we take digital banking for granted. However, while domestic transactions occur almost instantaneously, cross-border payments can take three to five days to reach the target recipient, held up by a series of transfers from one party to another.
This can prove frustrating, particularly when both payers and payees expect cross-border payments to provide the same seamless experience they’ve come to expect from other digital transactions. Organisations therefore need a way to test common scenarios in real-world environments – using real bank accounts, credit and debit cards, and digital wallets – to ensure that funds flow freely and enable them to identify potential problems and sources of friction for a better cross-border payment experience.
Delaying the payment process
The use of cross-border payments is on the rise. Forrester estimates that, in the US alone, the value of B2B e-commerce is set to reach $2.2 trillion by the end of 202. As a result, 80 per cent of B2B payment will be digitalised. BNY Mellon reports similar figures, with 80 per cent of businesses expecting an increased volume of cross-border transactions in the next 24 months. Yet despite this huge growth, the speed at which cross-border payments are made can lead to a poor experience for payers and payees alike.
For many years, most commercial cross-border payments have relied on correspondent banking models, typically involving smaller banks with operations in a single country and larger banks with a presence in several other markets. But the multiple handoffs, manual processes, and charges between these corresponding banks are responsible for delays in the process, as they handle factors like inconsistent currency conversion rates, and varying legalities between one country and another.
Limited visibility into this complex process highlights some of the drawbacks of the systems. A typical international electronic transfer of funds, for instance, will take at least a week to reach its designated recipient, and there will often be no notification that the payment has been successfully processed.
Tackling complexity
Steps have been taken to tackle this complexity, although to somewhat limited effect. TARGET Instant Payment Settlement (TIPS), for example, allows individuals and businesses with the European Union to transfer funds in near real-time, regardless of their local banks’ opening hours. There’s no global equivalent, though, and it doesn’t do much to help merchants accept payments from customers who reside outside of the EU. Also, while Swift (Society for Worldwide Interbank Financial Telecommunications) has improved communications around cross-border transfers, it hasn’t yet reduced processing costs or times.
Even services like Payoneer and Stripe, which offer cross-border payments that bypass traditional banks, are still required to validate payments while making sure both consumers and merchants enjoy a seamless user experience; and doing both simultaneously is no mean feat.
Specific scenarios in real-world environments
To ensure funds flow freely across borders, that exchange rates are calculated correctly, that payments comply with relevant legal and security requirements, and with anti-money laundering (AML) checks and regulations, organisations must test all types of transactions – from overseas transfers to in-person payments made abroad. However, as important as this is, most organisations will have difficulty testing the most common cross-border transactions, such as a traveller using their credit card to make a payment in a different country. The solution lies in crowdtesting.
When businesses need to assess cross-border payments, crowdtesting can quickly provide them with access to testers in specific locales to help them understand the customer journey. Whether it’s a small business owner in the UK attempting to wire money to a supplier in India, someone with a US-issued credit card making a purchase in Australia, or a merchant that’s about to see a spike in international traffic due to a seasonal promotion.
A worldwide testing community of vetted testers – using real bank accounts, digital wallets, and credit or debit cards – allows businesses to explore a range of common scenarios in real-world environments. In doing so, specialist crowdtesting not only ensures businesses remain compliant with all relevant and applicable regulatory requirements but, by pinpointing problems and sources of friction, it means businesses can iron them out so all parties can enjoy the seamless and satisfactory cross-border payment experience they’ve come to expect in today’s digital age.
