Tapping into the global economy means successfully navigating the challenges associated with cross-border payments. Even relatively simple obstacles, like processing payments in foreign currencies, can quickly become a major headache if you fail to account for the volatility of exchange rates and
Proactively addressing common challenges like fraud, regulations, and processing times can protect your company’s profitability. Doing so aids your efforts to expand into new markets and ensures you have all the tools to process payments in currencies from Dinars to Australian Dollars.
Understanding Key Challenges
Cross-border payments in the era of eCommerce can become complicated quickly. Without a proactive approach to addressing these hurdles, you may fall foul of international law, tax agreements, or fraud. If you’re processing international payments, you should work with software that accounts for:
- Regulations designed to combat money laundering and improve income visibility;
- Fraud and cyber security threats ranging from Phishing to identity theft;
- Slow transaction times that may take days to clear;
- Currency rates that fluctuate between payments.
Addressing these challenges is key to win in the global economy. Even simple changes like opting for a payment portal can protect you against legal fees and higher taxes.
Combating Fraud in eCommerce
Fraud is a serious issue for the global economic economy. Between 2-5% of global GDP is laundered per year — that’s between EUR 715 billion and 1.87 trillion. Fraud can impact your business, too, as falling foul of criminal activity is easier than you might think.
There are many roles for AI in ecommerce today, as they can improve inventory management, personalize product recommendations, and provide predictive analytics. AI is combating fraud by:
- Tracking consumer interactions;
- Identifying suspicious behavior;
- Keeping you up to date with trends in criminal activity;
- Providing data to aid your efforts to reclaim stolen revenue/products.
Taking a data-driven approach to fraud can act as a deterrent, too. By working with well-established payment processing software, you can turn away increasingly emboldened criminals and reduce your risk of falling victim to fraud when making cross-border payments.
If you’re looking for payment providers, consider opting for providers like Swift and Wise, which have recently partnered to offer API services, payment pre-validation, and cloud connectivity. Supporting these developments can aid the bank’s efforts to reduce global remittances and update legacy software that is not equipped to handle cross-border payments.
Analyzing Transaction Data
Leveraging consumer data doesn’t just protect you against fraud. When used correctly, big data can help you make smarter financial decisions when expanding into the global economy. Successful use of big data can aid your efforts to:
- Identify market opportunities in the global economy;
- Manage risk during expansion and mitigate investor losses;
- Improve your forecasting efforts for greater stock management;
- Enhance customer services regarding payment transactions when selling to consumers from overseas.
Utilizing an AI-driven big-data analytics program will help you overcome challenges associated with data adoption, too. Most analytic programs have built-in functions that “clean” your data sets and transform unwieldy information into useful customer and market reports. These tools can help you raise capital from investors to ensure that you can navigate any challenges associated with cross-border payments without running into the red.
Leveraging AI to track transaction data can help you make sense of the fees that you are likely to incur when conducting business internationally. International bank payments are frustratingly opaque as fees are commonly hidden within currency translation rates. This can eat into your company’s profitability and undermine your efforts to conduct international payments.
As the global economy grows, more banks are investing in financial tech (Fintech) like blockchain to minimize these fees and offer more competitive payment options to companies. As a business leader, you can use AI to keep track of these transactions via blockchain and minimize the risk of costs like investigation charges.
Conclusion
Navigating the complex web of cross-border payments can be a real headache if you’re new to selling in the global economy. You may unknowingly expose yourself to fraud if you don’t take a proactive approach to cybersecurity and could fall foul of international tax laws if you fail to work with a well-established payment portal. By taking a proactive approach to processing cross-border payments, you can hedge against currency risks, enhance your security measures, and improve your payment processing times.
Source
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
