Taking cross-border payments to the next level

27/10/2020

Under the current economic climate & the rapidly changing business environment, corporate treasurers are facing multiple challenges to support their expanding international operations.

Although transacting across different countries has become easier than ever before, sending and receiving payments can be a nightmare for some businesses. 

Treasurers are typically seeking to simplify and to improve their efficiency in managing foreign currency payments and collections, to protect the business against the impact of currency fluctuations, to achieve price transparency and to manage operational risks.  

The main objective is to increase visibility and gain control over their global cash positions, anytime, anywhere.

This objective is similar for all organisations, from the largest multinationals through to emerging microbusinesses. However, the larger the company is and the more countries it operates in, the more challenging it is.

Accessing effective, convenient cross-border payments including FX services is key to achieving these objectives.

 

Cross-border payments are a nightmare for too many corporates

Today, the process of making an international payment remains rife with friction, hidden costs, and inefficiencies.

The traditional process earned a poor reputation for being slow and opaque: often, senders would not know when their transfer would arrive – or even how much would ultimately be credited in the recipient’s account.

The sources of such friction are numerous:

• Cost: cross-border payments are more expensive than domestic payments, and it is often difficult to assess and deduce charges incurred through multiple correspondent banks. The result is a loss of value and a lack of visibility and auditability.

• Information and traceability: as payment messages go through multiple banks, payment information can be truncated or lost, making payments and collections more difficult to reconcile.

• Complexity: as companies work with more and more suppliers worldwide, they need to open and manage a larger number of accounts, resulting in growing administration burden.

• Risk: by maintaining multiple foreign currency accounts, the company is exposed to FX risks and may need to exchange currency to fund supplier payments, which adds costs and require greater administrative efforts.

Unfortunately, these challenges go against treasurers’ and finance managers’ objective to achieve cost-effective, highly automated end-to-end payments processing.

 

Accessing next generation service for executing cross-border payments

In order to overcome these industry pain-points, banks are intensifying their efforts to improve the customers’ experience.

In this regard, SWIFT, the banking community and Societe Generale in particular, are bringing standardisation at the heart of payment processes. 

The SWIFT gpi initiative aims to transform the cross-border payment experience by delivering faster fully trackable payments. Societe Generale is among the most active banks contributing to the solution’s definition and development. The bank has also developed a full range of services around Swift gpi: PSR* gpi and the gpi Tracker, available on its web banking platform SG Markets, to name but a few.

But we cannot ensure delivering an exceptional customer experience without improving our FX services. The process of exchanging currencies has often added cost and complexity to cross-border transactions. Traditionally, companies have tried to mitigate some of the challenges of international payments by paying suppliers in their base currency or another major currency such as USD. This minimises the number of currencies and accounts they need to maintain. 

Our PAY FX solution enables corporates to offer more flexibility to their business partners. Payments are made in local currencies, with no need to maintain in-country accounts.

 

 

At the end of this year Societe Generale’s customers will be able to carry out transactions in more than 120 currencies using their standard account, while benefiting from gpi’s tracking information.

This makes cash management much easier. And this is our objective. To offer a seamless payment experience combining gpi cross-border standard with an extensive and effective transactional FX solution.

 

 

Even if the industry is not able to remove 100% of frictions, we have made significant progress to enhance the management of international payments.
 

*PSR: Payment Status Report

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