We live in a hyperconnected world. As technology advances, geographical borders become less and less limiting. While technology is sprinting, traditional financial institutions seem always to have one foot, if not two, in the past. Modern consumers are used to moving fast, carrying out transactions instantly, connecting with people on the other side of the globe, and doing it all with complete ease and accessibility. Meanwhile, sending and receiving money across borders is often still an uncomfortably archaic, clunky, confusing, and expensive process. And that doesn’t just go for those sending and receiving the funds. It’s a pretty cumbersome process for the financial institutions, too.
With challenges come solutions, and a number of tech providers have unveiled cross-border payment technology to make these transactions less expensive, time-consuming, and inconvenient. Though, what is rarely considered is the limitations of these providers. It’s important to note that there are two key service offerings when it comes to cross-border payments, and most providers only offer one of the two.
International USD Payments
On one side of the spectrum, we have International USD Payments, often referred to as cross-border USD payments. This is the transfer of funds between entities or individuals in different countries, with the United States Dollar (USD) as the primary currency of the transaction. Businesses often use international USD payments for transactions like international trade, settling invoices, or sending money to foreign subsidiaries. Or, individuals may wish to send USD to another person and business who is currently in another country.
In the past, initiating traditional International USD Payments involved cumbersome paperwork and documentation, with businesses compiling extensive forms and contracts. Clients had to visit their bank branches in person, relying on manual data entry prone to errors. Currency conversion, if required, lacked transparency, leaving clients at the mercy of their bank's exchange rates. Tracking transaction progress was challenging, often necessitating email or phone communication with banks, leading to significant delays in funds reaching beneficiaries. But, a number of fintechs and tech-forward solutions have emerged to address these challenges.
Foreign Exchange Payments
On the flip side, Foreign Exchange (FX) Payments involve the conversion of one currency into another to facilitate international transactions. These payments may not necessarily involve USD as the primary currency. Cross-border foreign exchange payments are used when the sender and receiver deal in different currencies, and currency conversion is required to complete the transaction. These payments are prevalent in international travel, e-commerce, and any situation where parties in different countries need to exchange currencies.
Traditional FX Payments required clients to engage currency exchange providers or bank FX desks, where manual exchange rate quotes were obtained through phone or in-person visits. Paper-based documentation was needed to specify source and destination currencies, resulting in time-consuming processes. Banks manually converted currencies, often with rates that favored the bank, while clients incurred fees for conversion services and international transfers. Delays, uncertainty, and limited visibility were common, as manual processes introduced inefficiencies into FX payment execution, affecting both timing and cost control.
Clearly, both of these areas are in need of modernization. Unfortunately, many providers only focus on one or the other.
A Dual Approach
Dual capabilities in international payments are poised to redefine the way we conduct cross-border transactions. Imagine a platform that seamlessly combines the strengths of International USD Payments and FX Payments, offering businesses and individuals a one-stop solution for their global financial needs.
In such a system, users can initiate transactions with ease, enjoying the flexibility of choosing between international USD transfers or FX payments as the situation demands. Whether it's sending money to a foreign subsidiary in USD or paying an overseas vendor in their local currency, this dual capability empowers users to navigate the global financial landscape with unparalleled efficiency.
Mozrt's MFX platform is a game-changer in the world of international payments and foreign exchange. With a focus on meeting customer expectations, MFX offers online international USD and FX wire services with a modern, intuitive customer experience. Its modular design seamlessly integrates into existing front and middle office platforms, enhancing efficiency. Key features include a 'Payment first' workflow for simplicity, customized payment experiences to boost FX volumes, beneficiary management, and a payment tracker leveraging chosen liquidity providers. MFX also empowers treasury operations teams with configurable tools, compliance integration, and a full reporting suite. The result is an unparalleled platform that simplifies international payments, drives efficiency, and optimizes FX transactions while reducing manual errors.
If you want to learn more about our MFX platform and how you can leverage it, get in touch.