Challenges for SMEs in international payments – can FinTechs help?

Drivers for international payments

Hello Mr. Keller, foreign trade in Europe is growing, and the integration of companies with the global economy is increasing. What drivers do you see for international payments?

COVID-19 has massively accelerated the growth of e-commerce by forcing companies to engage with their customers through digital channels. As a result, more and more payments were processed online. As buyer-seller interactions increasingly take place online, barriers to international trade for both consumers and businesses continue to be reduced at the same time.

Innovations in payment transactions and foreign exchange trading give companies more security and predictability in foreign business. While banks are often reluctant to assist their customers with international ambitions, agile fintech companies of all sizes offer a wide range of solutions. This simplifies international business, resulting in more international payments.

Challenges for German medium-sized companies

Which challenges do you see for German medium-sized companies with regard to international payments and foreign currencies? How can Ebury provide support in this respect?

In our discussions with German companies, the many challenges and hurdles in international payments are a recurring theme. The following three areas stand out in particular:

• Costs: International payments are most often sent via international transfers. These transfers are expensive, as banks often charge high fees per transfer. Moreover, the payment often involves intermediary banks, which also incurs costs. These can sometimes add up to over USD 100 and are deducted from the face value of the payment. Consequence: the payees, in turn, receive a lower amount, which often leads to problems. Through Ebury’s global payment network, we are able to route many transfers through a local payment system, thereby incurring much lower costs.
• Speed: Since transfers are frequently made through intermediary banks, payments are often held up, which delays the recipient’s receipt of the payment. Thanks to our local payment routes, we can often process payments on a same-day basis.
• Unhedged FX exposure: Companies are not always aware of the risks of currency fluctuations. Unhedged payments in foreign currency can significantly increase costs in the event of unfavorable exchange rate developments. Our risk management approach helps companies to minimize currency risks in cross-border trading.

USP of Ebury

Payment products are easily interchangeable, and differentiation seems difficult. What exactly is Ebury’s USP?

Ebury is a full-service financial services provider for small and medium-sized companies engaged in international business. As a fintech company, we provide our customers with a wide range of efficient, digital solutions without them having to forgo individual and personal advice. This combination makes us so successful and sets us apart from the competition.

In contrast, given their high infrastructure costs, banks, for example, find it difficult to provide smaller companies with access to international markets. We have built a strong global presence, supported by our digital platform and extensive specialist network. This allows us to support customers in their local markets and provide them with access to over 130 currencies.

How can Ebury secure the competitive advantages in its business model in the long term?

Our daily ambition is to make international business easier for medium-sized companies and to ensure sustainable success for our customers. We are consistently developing our product offering and are continuously adding new functionalities. We currently offer market-leading solutions for cash management, payment transactions and trade finance. At the same time, we provide all customers with access to tailored FX risk management, which in the banking world is often reserved for large corporations. We are proud of the close relationship we have with our customers – we understand their needs thanks to our daily close contact. Together with the continuous development of our products, this will set us apart from the competition in the long term.

International payments of the future

What role will new market developments (e.g. crypto, stablecoins and CBDC) play in international payments of the future?

Many market participants believe that Web3 is one of the most exciting technological developments of the 21^st century and offers great potential to revolutionize international trade.

Stablecoins can help harness the power of the Internet to process payments even faster while maintaining the stability of fiat currencies, whereas cryptocurrencies provide an alternative financial system to much of the developing world. The rapid development of central bank digital currencies (CBDCs) shows how seriously governments and central banks are taking this emerging ecosystem. We are closely monitoring developments in this area and will continue to leverage technological advancements to develop solutions that support our customers in cross-border trade.

Thanks for the interview Mr. Keller. We wish you and Ebury all the best for the future.