Fintech Security

Multi-Currency Wallets Aid Cross-Border Payments

Foreign exchange (FX) volatility presents challenges for cross-border payments, but digital multi-currency wallets offer a solution.

According to Ola Oyetayo, CEO at B2B cross-border FX and payments enabler Verto, several of their customers are concerned about how the “macro” will impact them on a 6-month or 12-month basis, taking into account the Russia-Ukraine geopolitical crisis, COVID-related supply chain constraints and significant political events in the U.K., the firm’s primary market.

“If you’re a U.K. business that needs to trade overseas, suddenly your pound income isn’t what it used to be six months ago,” Oyetayo told PYMNTS in an interview, adding that talk of a looming recession and how long it will last has further complicated matters.

Read more: The B2B Marketplace Fix for FX in Emerging Markets

Interest rates falling to multi-year lows across most markets — and the fact that debt is now going to be more expensive going forward — is another issue top of business owners’ minds as they recalibrate their expectations on what their capital structure, working capital and business expenses would look like going forward.

Furthermore, servicing emerging markets in Africa — one of the most expensive corridors to send money to in the world — has been particularly challenging for foreign businesses, considering that four of the five worst performing currencies against the U.S. dollar this year have been African currencies, Oyetayo pointed out.

Read also: B2B Marketplace VertoFX: From Currency Convertibility to Cross-Border Payments in Emerging Markets

As a result of the extreme currency volatility, he said an increasing number of customers are being a lot more cautious about doing transactions in these markets — a concern Verto is addressing by educating customers on how to navigate the macroeconomic turmoil.

See also: Currency Exchange Marketplaces Accelerate Supplier Payments for Emerging Markets SMBs

The firm unveiled its multi-currency digital wallet solution earlier this year, which enables Verto’s clients to receive and send payments across 190 countries and in up to 51 currencies. The tool has also been useful to businesses looking to hedge against currency risks.

“Having that inherent product that helps mitigate risk, and also being very proactive about informing customers on what’s happening from the macroeconomic perspective have been the measures that we’ve taken to help them with this [challenge],” Oyetayo explained.

Enabling Instant Cross-Border B2B Payments

A key differentiator between consumer cross-border payments and B2B transactions that Oyetayo pointed to is the different security concerns associated with them.

He said that part of the reason instant payments have been more readily adopted by consumers than businesses is that the latter like to have a safety net — the ability to correct course if something goes wrong.

He added its much easier when it’s a consumer payment and it’s a low ticket price equivalent to about $100.

“But if you’re doing $500,000, for instance, and something goes awry, that’s a big problem,” Oyetayo said.

Complying with various global anti-money laundering regulations is another factor slowing the adoption of real-time B2B payments, Oyetayo noted, especially the challenge in ensuring that beneficiaries are not sanctioned or on any kind of banned list.

Despite these challenges, however, he said that many Verto customers have expressed an interest in the firm’s instant wallet-to-wallet services, underscoring its growth potential as global real-time infrastructure develops.

Moreover, any move that helps to reduce the amount of time it takes to move money internationally with as little friction as possible “is always a win for customers [and] for industry players, such as ourselves,” he further said.

Targeting African Markets

To take B2B payments up a notch, the London-based currency exchange marketplace is developing new capabilities to give its users actual bank accounts with international bank account numbers (IBANs), rather than having to rely on the firm’s digital currency wallets, Oyetayo said.

Related: Verto Unveils B2B Multi-Currency Global Accounts

And heading into 2023, he said that further developing the product, especially expanding it to African markets, is one of Verto’s top priorities.

The cross-border payments application programming interface (API) it also launched earlier this year will remain a key priority moving forward, helping businesses to automate currency conversion and global payouts as well as customize their own FX and payment flows.

Learn more: Verto Debuts Cross-Border Payments API

As Oyetayo said, part of its mandate is to help bring currency exchange to the world of embedded finance, enabling FinTechs and large international corporations to embed FX services into their products by plugging into the firm’s cross-border infrastructure.

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