Bridging the Payment Gap: How Globally Native Platform Businesses Are Embracing Fintech Solutions

Platform-native businesses are increasingly eyeing international expansion and accelerated growth, but they face a significant hurdle — the payment gap. Ryan O’Holleran, Head of Sales, Enterprise, EMEA at Airwallex, a global payments and financial platform, delves into the legacy challenges that hinder growth and the strategies available for globally native platform businesses to overcome the payment gap, as outlined in The Fintech Times news. 

In today’s digital era, platform businesses have emerged as influential intermediaries connecting buyers, sellers, and service providers to redefine how transactions occur. With the aim of connecting even more participants into their marketplaces, these businesses are rapidly expanding on a global scale. Whether it’s e-commerce platforms like Shopify or wealth management platforms like Public, the clear path to growth is to be borderless from the start.

However, cross-border payments have emerged as a critical piece of the puzzle for market expansion. Unfortunately, inefficient cross-border payments often impede growth into new territories. Platform businesses frequently encounter fragmented financial systems in different markets, causing complexity and friction.

Ryan O’Holleran highlights several cross-border payment pain points, emphasizing the importance of a seamless customer experience. One significant challenge is the forced and costly currency conversions that platforms face. Traditional banking providers typically offer unfavorable exchange rates and charge high fees for currency conversions. For example, a U.S.-founded investing platform aiming to expand overseas must have efficient currency conversion infrastructure to allow UK users to invest in U.S. equities. Without a seamless and cost-effective GBP to USD conversion, this can lead to customer dissatisfaction and eat into the platform’s profits.

Additionally, traditional cross-border payment systems often involve intricate processes and multiple intermediaries, leading to settlement delays. These delays can disrupt a business’s cash flow, causing issues like order fulfillment or supplier payments. The complexity increases with each market a platform enters, making management increasingly challenging.

Integrating with different payment methods and systems in diverse geographical regions is another headache for platform businesses. Compliance with different regulatory requirements in each market adds to the complexity, diverting attention from core operations and hindering international growth.

Fortunately, innovations in technology are providing solutions to these cross-border payment challenges. Many platform businesses are turning to fintech providers that can address these payment pain points through a single integration.

One innovative approach is offering platform businesses feature-rich FX capabilities directly integrated into their technology stack. For instance, fintechs can offer ‘lock FX,’ allowing users to lock in an FX rate during volatile periods, mitigating FX market risk in cross-border payments. This can be seamlessly enabled through an API, allowing businesses to focus on their core activities instead of hedging FX costs.

Moreover, fintech providers are simplifying currency management by enabling businesses to hold and store money in multiple currencies within a single account. This eliminates the need for businesses to open separate bank accounts in each market and simplifies cross-border transactions.

By using a customizable API, platform businesses can seamlessly connect to a global payments network, sending and receiving payments without the need for extensive banking relationships in each market. Fintechs are also aiding platform businesses in navigating KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance requirements in each market, relieving them of compliance burdens.

Efficient financial infrastructure is pivotal for the multi-market strategy of globally native platform businesses. Streamlining payment processes reduces both time and costs for businesses while providing end customers with a more seamless experience. As platform businesses aim to scale, compete, and thrive globally, overcoming the payment gap through fintech solutions is becoming increasingly essential.