Study Reveals Cross-Border Businesses’ Top Priority is Expansion
March 29, 2023
A new study released by Rapyd found 41% of businesses see expanding their cross-border operations as a priority. As a result, said businesses are looking to “double down on their growth ambitions” as the economy becomes more challenging.
The study, titled 2023 State of B2B Cross-Border Payments Report surveyed 715 medium to large cross border businesses in Brazil, Mexico, Canada, Germany, Singapore, U.S. and UK markets, and it revealed the different views of businesses around the globe.
The three key elements of cross-border operations and expansion according to surveyed respondents, are speed, cost, and efficiency, and therefore the high transaction fees and payment delays harm revenues, cash flow and makes it harder for businesses to plan and organize their finances.
Excessive transaction fees seem to be one of the key burdens businesses have to deal with. The study found 76% of businesses have to pay fees of $10 or more on cross border payments., 25% reported fees of $25-50 and 15% claimed to be paying $50+ dollars in fees to suppliers, employees, contractors, and distributors.
42% of cross-border businesses paid .25% to 1% in foreign exchange fees on each cross-border transaction, and 25% said they pay between 1% to 3% or even more.
It would be one thing to pay such high fees if the transactions were expedited, but the case is the contrary, as 38% of surveyed businesses claimed delays of five days or even more when receiving or sending payments to other businesses. Singapore and Germany seem to suffer the longest delays.
In the US, 50% of correspondents admitted they experience delays of 5 to 10 days, and the biggest challenges when sending cross-border payments are high costs at 29%. Management and regulations of foreign exchange at 28%, and security compliance at 24%.
The need to overhaul cross-border payment processes is globally recognized by all surveyed businesses, and of course, technology is at the forefront of this change. 35% of respondents affirm better Fintech solutions will aid with their current concerns, and 61% have made the digitalization of systems a priority on their list. Others have already taken the step to automate systems.
According to the General Manager of Rapyd Collect, Garðar Stefánsson, the larger companies grow, the more their fees rise, and it is unacceptable in this economy. Fintechs are in a unique position to help cross-border businesses with their expansion ambitions by “providing faster and more cost-effective payment solutions, as well as creating innovative new approaches that simplify the way these systems operate.”
The path forward looks very bleak right now: the state of the economy is a concern, and inflation is already affecting households everywhere. For a business to thrive, expansion is the best way, but fees might hold many merchants captive in their markets. Hopefully fintechs moving forward will work with businesses to make better processes that will not only benefit businesses but customers as well.