It pays to go digital in transfers

More than 70 per cent of companies surveyed in the UAE feel there is a lack of transparency in traditional payment transfer.

Cross-border transactions are the pulse of any economy and yet it remains plagued by lack of transparency and traditional payment methods, leading to a slower remittance process and waste of both time and money. UAE companies are strongly feeling the pinch, but hope emerges from growing digital adaption in payments systems.
The latest international payment survey by PayCommerce has revealed that more than 70 per cent of companies surveyed in the UAE feel there is a lack of transparency in traditional payment transfer.
The study, which surveyed 122 respondents, showed that 74 per cent did not know how much transaction fees they were paying and more than half (54 per cent) said they were not able to track the status of payments or receivables through international bank transfers, highlighting the lack of transparency.
Max Narro, CEO of PayCommerce, says traditional international payment methods must evolve and address customers' pain points given high business stakes involved. "Weaknesses of traditional international transfers are already leading to a shift in customer preferences and going further, this trend is bound to strengthen unless correspondent banks explore and adopt innovative ways to make cross-border payments fast, cost-effective and transparent."
By 2022, the value of cross-border transactions is expected to nearly triple to over $54.8 trillion from $20.5 trillion in 2012 and the number of transactions will grow from 9.9 billion to 20.7 billion, according to a Boston Consulting Group analysis.
A majority of the companies surveyed by PayCommerce said that the traditional payment transfers are "very slow" and 'very expensive". The respondents said that their pain points related to international wire transfers were that these were very slow (32 per cent) and very expensive (44 per cent). Ten per cent said they were unable to get payment status and some found it difficult to find correspondent banks in certain regions.
About 49 per cent of UAE companies said the average settlement time they experienced for international transfers was between three and five business days, the PayCommerce survey found. Even though 35 per cent of the companies are opting for bank transfers and another 25 per cent for remittances through third party remittance service business, there is a growing segment that is using online payment gateways (14 per cent) and credit cards (21 per cent).
Encouragingly, 67 per cent of the companies surveyed said they were willing to opt for a more cost-effective and transparent method of sending and receiving international payments.
Paulo Gomes, vice-president for the Middle East and Africa at Diebold Nixdorf, explains that international transfers can take between two to five working days depending on the type of payment being made, the currencies involved and time of day the request is made. One of the reasons for this time delay is the large volume of remittance transactions requested in a day at the same time. It takes banks time to process all the transfer requests, and they aren't processed on the same day received. Also, depending on the destination country, the transaction may need to be confirmed with a regulatory system, which may cause further delay.
However, Narro points out that the world of transaction banking and payments is being transformed. Technological advances, shifting customer behaviour and expectations, as well as regulatory changes are advancing the transformation, says a BCG Perspectives analysis. Newer, efficient and faster international payment networks are providing innovative solutions, simplifying and speeding up international transactions for businesses.
"Traditional international payment systems need to deliver new customer solutions along with far more efficient and cost-effective measures. The rapidly changing landscape of cross-border payments poses a clear challenge of making effective yet quick changes in the traditional payment systems," said Narro.
"The ones that act now will be able to capitalise on the increasing opportunities in the current dynamic scenario where digital transformation is dramatically changing the way we transact."
Digitalisation converges the physical and digital worlds or cash and consumer transactions, to optimise efficiencies, provide consumer convenience and elevate the consumer experience. Many transactions that are currently carried out at a branch can be migrated to the self-service channel and this includes international remittance transactions, adds Gomes.
"By moving this transaction to the self-service channel, consumers are not bound by hours and can carry out a transaction anytime of the day at their convenience. Furthermore, they save time with the automated processes, which reduces the need to queue to complete a transaction," added Gomes.
According to a report by Accenture, ATM transaction costs are up to 90 per cent more efficient than branch transactions. Similarly, the cost of international remittance transaction would decrease as a result of a higher transaction volume.
UAE Exchange offers a real-time account credit facility; this host-to-host money transfer facility saves time and money for customers. It enables real-time account credit 24/7/365 irrespective of holidays or Sundays without any manual intervention. Customers also get an SMS notification on amount getting credited in the desired bank account reducing the follow-up costs.
Xpress Money enables anywhere cash payout instantly offering online money transfer facility in various countries, wherein customers can transfer money using a computer to any bank account, as cash payout or to any card. To transfer it they can use their debit card, bank account or credit card. All these smart solutions are aimed at reducing the process time and save money of our customers, said Shetty.
 
- sandhya@khaleejtimes.com