Tapping into the global economy requires successfully navigating the challenges associated with cross-border payments. Even relatively simple tasks, like processing payments in foreign currencies, can become major headaches if you fail to account for the volatility of exchange rates.
Proactively addressing common challenges like fraud, regulatory compliance, and processing times can help protect a company’s profitability. These measures support efforts to expand into new markets and ensure the necessary tools are in place to process payments in a wide range of currencies, from dinars to Australian dollars.
Understanding Key Challenges
Cross-border payments in the era of e-commerce can quickly become complicated. Without a proactive approach to addressing these hurdles, organizations risk running afoul of international laws, tax agreements, or fraud. If they’re processing international payments, organizations 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
Navigating these challenges is key for succeeding in the global economy. Even small changes, like adopting a reliable payment portal, can help protect organizations from legal fees and excessive taxes.
Combating Fraud in E-Commerce
Fraud is a serious issue for the global economic economy, with an estimated 2% to 5% of global GDP laundered each year—amounting to between EUR 715 billion and 1.87 trillion. Fraud can significantly impact businesses as well, and falling victim to criminal activity is often easier than expected.
AI plays many roles in e-commerce today, enhancing inventory management, personalizing product recommendations, and offering predictive analytics. AI is also combating fraud by:
- Tracking consumer interactions
- Identifying suspicious behavior
- Keeping up to date with trends in criminal activity
- Providing data to help reclaim stolen revenue/products
Taking a data-driven approach to fraud can also serve as a powerful deterrent. Utilizing well-established payment processing software helps deter increasingly emboldened criminals and reduces the risk of falling victim to fraud in cross-border transactions.
When evaluating payment providers, consider Swift and Wise, which have recently partnered to offer API services, payment pre-validation, and cloud connectivity. These innovations can support bank’s efforts to streamline global remittances and modernize legacy software that is not equipped to handle cross-border payments.
Analyzing Transaction Data
Leveraging consumer data not only protects against fraud but also empowers organizations to make smarter financial decisions when expanding into the global economy. Successful use of big data can help:
- 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 can help organizations overcome challenges associated with data adoption. Most analytics programs have built-in functions that clean data sets and transform complex information into actionable customer and market insights. These tools can also assist in raising capital from investors, ensuring that organizations can navigate challenges related to cross-border payments without falling into financial difficulties.
Leveraging AI to track transaction data can help organizations better understand the fees they are likely to incur when conducting business internationally. International bank payments are often frustratingly opaque, with fees commonly hidden within currency conversion rates. This lack of transparency can erode a company’s profitability and hinder its ability to manage international payments effectively.
As the global economy expands, more banks are investing in fintech solutions, like blockchain, to minimize these fees and offer more competitive payment options to companies. AI can be used to monitor transactions via blockchain, reducing the risk of hidden costs like investigation charges.
Conclusion
Navigating the complex web of cross-border payments can be daunting for organizations new to the global economy. Without a proactive approach to cybersecurity, companies may unknowingly expose themselves to fraud. Additionally, failing to work with a well-established payment portal can lead to compliance issues with international tax laws. By adopting a proactive strategy for processing cross-border payments, companies can hedge against currency risks, enhance security measures, and improve payment processing times.
