The so-called traditional banks are always coming under criticism for not being agile or responsive enough in the new, app-based, at-the-click-of-a-button world.
But credit where credit is due, they have long established a framework of automated payments (direct debits and standing orders) that works seamlessly – as long as you meet some stringent criteria.
By and large, the customer has to be a long-term resident in a territory and paying an established company or individual in the same territory, using the same currency. The problem is consumers increasingly don’t fit the profile.
The consumer payments universe is challenged by two distinct trends. From one side is the growing habit of buying across borders, popularized by ecommerce sites such as Etsy, eBay and Alibaba. On the other is the itinerant workforce ranging from top level executives to seasonal workers. But these two trends have one thing in common – the need to manage money in multiple territories.
International payments challenges
Retailers and banking partners need to respond to the new, multinational individual. If it were a matter of single or occasional purchases, the inconvenience of processing transactions through standard payments providers might be bearable. But increasingly these are regular occurrences. Here are just a few scenarios where ongoing, cross-border payments are necessary:
- Workers contracted to another country – payment obligations at ‘home’ (mortgage, utilities) while receiving income and paying other expenses in the current location.
- Recent permanent migrants – lacking the credit history or banking facilities to meet payments obligations in the destination country. Managing payments in the destination country from savings or income held in the country of origin.
- SMEs selling or sourcing from foreign territories – acquiring regular supplies or inventory; supplying to retailers or individuals abroad.
Tools for international transacting
One of the main reasons to date why agile finance startups haven’t been able to address these trends is the tangled web of cross-border regulation, technology and compliance issues they face.
Integrating a currency-based API, however, cuts through these challenges by providing a ready-made, compliant solution, taking the burden away from the financial services provider.
Monese is a mobile-only, consumer banking app designed to take on many of the challenges faced by international customers. It enables new UK residents to set up a bank account with just a mobile phone and a passport and none of the credit checks or income requirements standard banks usually require.
The account has all the features you could usually expect from a standard retail bank – direct debits, card facilities, international transfers – but because it is based on the Currencycloud API, it has none of the friction and much lower cost than standard international transfer companies.
Customers can hold both GBP and Euro accounts, having their salaries automatically paid into their local account without raising high fees, which they can then access either in Euros or in GBP wherever they are in the Eurozone. It follows that small businesses can also access payments in this way, however, Monese is yet to launch an official business account.
Many consumer bank accounts already enjoy frictionless, inexpensive (or free) automated payments – but only for a single currency in a single territory. In a world made increasingly borderless by digital innovation, payments automation sans frontieres is surely the way forward.