16 Feb 2023

Payments Curation: Taming the Cost and Complexity of International Payments

Aran payments curation

International payments have become costly bringing a great deal of operational friction. Creative disruption is needed and a new concept of payment ‘curation’ is showing signs of promise

Payment platforms are the unsung heroes of the global ecommerce revolution. They free marketplaces and merchants from the need to set up and manage their own payments infrastructure — a process which would otherwise require them to build huge in-house teams — and this in turn enables them to focus on what they do best: customer experience innovation and supply chain excellence.

However, the use of third-party payments technology is not a panacea. While preferable to building from scratch, the practice comes with its own set of challenges. Most prominently, it requires marketplace owners to be three or even four times removed from the flow of funds. For instance, a UK business looking to access Indonesia connects to a US fintech that sits on top of a processor in Singapore, which itself sits on top of a local PSP in Indonesia, which is only then connected to the main payment methods in the country.

Today, businesses and marketplaces use payments orchestration technologies to try and manage the complexity inherent to this mishmash of intermediaries. The orchestration layer smoothes the integration of various parties into a coherent system and optimises the user experience. With an orchestration layer in place, it should be easy for customers to purchase goods from abroad through an ecommerce site and relatively easy for merchants to manage the underlying transactions.

The challenges of payments orchestration

But here's the rub: no matter how good the orchestration layer is, it cannot alter the underlying complexity that comes with managing multiple intermediaries and hundreds of APIs across a range of different jurisdictions that have varying legal requirements, and in many cases outdated payments infrastructure. As a result of this complexity, international payments has become a costly affair that brings with it a great deal of operational friction.

Businesses are rightly concerned. For a start, friction can impact liquidity: one survey found that cross-border sales represent around 26% of the average total for businesses in the UK and the US, but receipt of payment for these transactions takes 55% longer than for domestic sales. For some merchants, the situation is so dire they are put off international growth entirely. According to a survey by Wise, 51% of growing businesses are dissuaded from overseas expansion because of the complexity of managing international payments.

Another key challenge is that while merchants can save time by accessing ready-made connections through an orchestration layer, they are unable to build the economies of scale that provide savings. This is because orchestration layers are unregulated and unable to sit in the flow of funds. Merchants must instead pay for each provider they use for each connection. Relying on networks upon networks, therefore, becomes incredibly expensive for fast-growing businesses — the unit economics simply don't stack up.

It follows that more and more businesses are taking a look under the hood and discovering just what they’ve sacrificed for quick access to connecting technology.

From orchestration to curation

International payments is clearly in need of some creative disruption, and this is where a new concept of payments ‘curation’ is showing huge signs of promise. The effect of payments curation is to tame the complexity of payments through the use of a single contract and just one API to cover all of a merchant's payments needs.

It provides businesses with a full payments stack that unifies payment acceptance, settlement accounts, and payouts, and provides the ability to manage payments across borders, while only charging merchants once for these services.

Whereas payments orchestration hides complexity and provides a veneer of cohesion to what is in reality a series of separate but connected transactions, payments curation delivers a truly simplified and cohesive approach, with the payments curation provider responsible for the heavy lifting of connecting, contracting, and building the technology stack. This holistic approach means that merchants can save time and money, and devote themselves fully to their core business operations.

As the global payments market continues to grow, with more than $2.5 trillion of revenues estimated by 2025, businesses that adopt payments curation will be best placed to thrive. Payments curation not only delivers a simple payments layer, it also absorbs risk, deals with multi-territory regulation, provides infrastructure buildout, and eliminates the complexity that comes with managing payments in-house.

Given the current economic picture these are benefits that all merchants should be keen to seize — make sure that yours is one of the first.

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