2024: A Game-Changer for Cross-Border B2B Payments

Innovation is poised to revolutionize the world of cross-border B2B payments in 2024, according to PYMNTS. Historically, global money transfers have posed considerable challenges for organizations seeking international expansion. Navigating regulatory hurdles, ensuring compliance, combating fraud, and dealing with fragmented payment structures have all hindered the efficiency of cross-border transactions. High fees and sluggish processing times have further exacerbated these issues.

However, the adoption of technological innovations and their network effects is beginning to alleviate these long-standing pain points. In today’s interconnected world, the demand for efficient and secure cross-border payment solutions has never been greater. The future of cross-border B2B payments holds immense promise, driven by advancements in artificial intelligence (AI), machine learning (ML), real-time payment solutions, embedded finance and distributed ledger technologies (DLT).

PYMNTS has engaged with industry experts throughout the past year, and the consensus is clear: 2024 will see a concerted effort to streamline cross-border payments.

Business customers now expect the same seamless, technology-driven experience in B2B transactions as they do in their everyday consumer lives. Eric Foust, VP of Banking Partnerships North America at Trustly, highlights cross-border payments as one of the key areas of innovation in B2B payments.

Dave Scola, CEO of Form3 U.S., predicts a shift away from traditional correspondent banking as real-time payments, distributed ledger technologies, and tokens play a more prominent role in simplifying cross-border transactions. Interoperability across regions and localities is critical for these innovations to be effective.

Neil Drennan, CTO at Visa Cross-Border Solutions, emphasizes the significant growth of the cross-border B2B market, with businesses seeking faster, transparent, and cost-effective global transactions.

Despite the potential, PYMNTS Intelligence reveals that only 23% of smaller businesses find current cross-border payment solutions satisfactory. Complexity in setting up international bank accounts, the demand for virtual accounts, and the need for seamless integrations with ERP and accounting systems are some of the key challenges identified.

Furthermore, the time it takes to move money across borders and the associated high fees remain significant hurdles. However, change is on the horizon. PYMNTS Intelligence reports that nearly two-thirds of financial institutions are willing to invest in new technology to address cross-border payment issues. This percentage rises to 88% for financial institutions serving larger companies.

Citi Global Co-Head of Payments and Receivables, Treasury and Trade Solutions (TTS), Amit Agarwal, identifies embedding payments in cross-border commerce as a multitrillion-dollar opportunity.

Additionally, AI is contributing to the digitization of invoices and streamlining complex contractual terms between buyers and sellers in cross-border B2B transactions. It also enables real-time transaction monitoring, identification of suspicious activities, and ensures compliance with regulatory standards.

The shift to ISO 20022 standards has the potential to enhance payment systems by introducing additional data flows. This can significantly reduce friction, delays, and errors when sending payments across borders.

2024 promises to be a transformative year for cross-border B2B payments, offering businesses efficient, secure, and cost-effective solutions to facilitate global growth. The convergence of technology and industry willingness to embrace innovation will play a pivotal role in reshaping the landscape of international commerce.