As technology has advanced, both consumers and businesses have increasingly relied on global payment services for various purposes. With the ongoing digitization of payment processes, fintech companies are focusing on enhancing speed and transparency while ensuring security remains a top priority.
In a recent FinextraTV interview, Gautam Pillai, head of fintech research at Peel Hunt, discussed significant developments in this area. He noted, “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.”
These three topics highlight the goal of creating a more interconnected system that operates swiftly and efficiently for users. Global payments cater to a vast audience, including consumers sending money abroad, often to family members, and businesses utilizing these services in payroll and supplier operations. Thus, having an effective and user-friendly system is crucial for growth and retention. Pillai elaborated on this need:
“If you think about it, outside of major global e-commerce vendors, when visiting a typical e-commerce site, you might notice that the checkout process takes you to a different environment, which adds friction. Embedded payments aim to integrate the payment experience within the website or app to reduce friction for customers and improve retention for businesses.”
On the consumer side, there is a growing need to send money internationally, exchange currency for travel, and engage in cross-border transactions with online retailers. This necessitates a swift and efficient process among banks. Pillai explained:
“Banks utilize a technology called correspondent banking networks, arising from the fact that not every bank is connected to every other bank globally. It creates a chain network. Cross-border payment companies like Wise use a technology called netting, which bypasses those correspondent banking loops and allows for direct transactions between individuals. This makes the transactions much faster, cheaper, and more transparent for consumers.”
In addition to the consumer needs for global payments, the B2B sector demands an even more streamlined process to accommodate increasing payment volumes each year.
“Businesses need to transact with one another and manage receivables and payables across different regions. Effective working capital management, along with robust risk management and payments strategies, is crucial in today’s cross-border environment.”
Pillai describes a continuously evolving global payments landscape that hinges on the integration of multiple technologies to enhance speed, transparency, and security. This includes training generative AI to identify fraud patterns. The challenge of improving the consumer experience while maintaining security represents an ongoing struggle among banks, hackers, and consumers alike.