Why Challenging Times Lie Ahead for Real-Time Cross-Border Payments

by Sarah Grotta 0

FX-MM.com, a monthly on-line magazine focused on treasury, trading and technology in international markets, posted an article regarding the complexity of business cross-border transactions. The complexities are expanding, as the demand for real-time or faster payments grows:

The introduction of real-time payments is inevitable and is being partially driven by customer demand for speed and convenience. Consumers have been given a taste of the real-time experience through point-of-sale debit and credit card transactions, as well as e-commerce purchases. Businesses are now asking for the same speed of service.

The reasons for complexity are similar to what is experienced for consumer transactions, just more involved with a wider number and types of technologies and regulatory concerns to contend with:

“…. one of the principal hurdles for real-time cross-border payments is the multitude of systems currently in operation. The success of an instant cross-border payment event depends on these various systems being at least fully automated and, if possible, synchronized with each other. The overall performance of any real-time payment process – which should involve data transfer, screening, validation, authorization, posting, clearing, settlement and notification – is driven by the sequentially, the pace and the effectiveness of the slowest links in the chain. A system that has multiple touch points involved will not only be more complex, it will also probably be slower and more vulnerable to problems.

Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group

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