Demystifying Cross-Border Payments

How Remittance Methods and Currency Issues Affect Global B2B Payables

From transaction and conversion fees to reliability, no single payment method works optimally in every situation. Understanding the effect of global payment remittance is critical to creating a payables strategy that:

1. Ensures greater delivery success
2. Reduces the risk of losing payees
3. Scales with global initiatives

Payee Preferences

The map above indicates the top payment methods for each country based on real data from Tipalti. How payees want to be paid depends on the country and transaction amount. Fees and banking infrastructures vary by payment method and that determines how much overhead is associated as well as the deliverability of the remittance. Even within a single country, there’s room for payment diversity.

At Tipalti, we’’’re constantly analyzing transactions to 200+ countries and 3 million payees to understand which methods are the most preferred.

Note: Even though payees may have expressed a preference, that method may not always be the most optimal. Payees don’t always consider the best option, and instead pick the most convenient, so it’s important to educate them what the tradeoffs are.

When paying globally, the issue of currency conversions and foreign exchange naturally come up. And depending on the country, there are vastly different reasons where local currency may or may not be favorable.

Based on our remittance data over the last 12 months, when given a choice to automatically have currency converted, here are the countries and the percent of payees that opt for a conversion at the time of payment. The data identifies that payees in some countries have a higher propensity for wanting to be paid in local currency, while others prefer USD.

	Andorra	40.0%
	United Arab Emirates	27.2%
	Anguilla	0.0%
	Albania	3.4%
	Armenia	0.0%
	Austria	84.2%
	Australia	82.7%
	Bosnia and Herzegovina	2.4%
	Barbados	0.0%
	Bangladesh	22.5%
	Belgium	71.3%
	Bulgaria	31.6%
	Bahrain	10.5%
	Bermuda	100.0%
	Brunei	0.0%
	Bolivia	66.7%
	Brazil	11.1%
	Bahamas, The	75.0%
	Canada	44.5%
	Switzerland	42.4%
	China	1.4%
	Costa Rica	0.0%
	Curaçao	0.0%
	Cyprus	25.3%
	Czech Republic	44.0%
	Germany	84.0%
	Denmark	76.4%
	Dominican Republic	1.3%
	Algeria	0.0%
	Estonia	36.9%
	Egypt	10.2%
	Spain	78.2%
	Finland	78.4%
	Fiji	100.0%
	France	78.4%
	United Kingdom	78.6%
	Guernsey	0.0%
	Ghana	15.4%

	Gibraltar	0.0%
	Greece	93.6%
	Guatemala	41.2%
	Hong Kong	7.5%
	Honduras	0.0%
	Croatia	59.4%
	Hungary	65.9%
	Indonesia	9.6%
	Ireland	64.7%
	Israel	16.2%
	Isle of Man	28.8%
	India	69.3%
	Iceland	0.0%
	Italy	88.6%
	Jersey	27.7%
	Jamaica	0.0%
	Jordan	61.3%
	Japan	73.8%
	Kenya	22.8%
	Cambodia	0.0%
	Saint Kitts and Nevis	0.0%
	Korea, South	72.0%
	Kuwait	68.8%
	Cayman Islands	0.7%
	Lebanon	0.0%
	Saint Lucia	0.0%
	Liechtenstein	0.6%
	Sri Lanka	45.0%
	Lithuania	41.9%
	Luxembourg	52.3%
	Latvia	26.5%
	Morocco	79.8%
	Monaco	7.7%
	Montenegro	78.8%
	Macau	20.0%
	Malta	53.7%
	Mauritius	0.0%
	Mexico	75.0%

	Malaysia	14.0%
	New Caledonia	100.0%
	Nigeria	0.9%
	Netherlands	72.9%
	Norway	82.7%
	Nepal	60.6%
	New Zealand	73.6%
	Oman	100.0%
	Peru	8.0%
	French Polynesia	100.0%
	Papua New Guinea	100.0%
	Philippines	72.2%
	Pakistan	70.7%
	Poland	31.2%
	Portugal	74.2%
	Paraguay	0.0%
	Qatar	33.3%
	Romania	42.9%
	Russia	23.4%
	Saudi Arabia	89.4%
	Sweden	67.6%
	Singapore	28.7%
	Slovenia	52.3%
	Slovak Republic	71.6%
	San Marino	63.6%
	Senegal	100.0%
	Togo	0.0%
	Thailand	76.3%
	Turkey	54.1%
	Trinidad and Tobago	0.0%
	Taiwan	27.1%
	Uganda	25.0%
	Uruguay	0.0%
	Vietnam	38.5%
	Kosovo	87.8%
	South Africa	70.7%
	Zambia	0.0%

In building a global payment strategy, finance and treasury teams need to understand the administrative and operations costs of taking on conversion efforts and weigh that against what they think they might save negotiating exchange rates with their bank. The process of establishing and maintaining foreign accounts and maintaining proper governance over them, may not be the best approach. Offloading the effort to an expert may offer the best experience for payer and payee.

1. Getting Payment Data Right

Preventing payment issues requires that the correct payee information is collected. While it’s possible to have your finance team communicate individually with each payee to ask how they would like to be paid, this is by far the least efficient and least secure approach.

Instead, put the responsibility on the payee to supply their payment information.

Use a secure portal that asks payees for their payment information, including nuanced elements such as their desired payment method, currency preference, and bank routing codes (e.g. IBAN and SWIFT codes when necessary). Collecting and validating this information up front prevents remittance issues later.

If you decide to build your own portal to accomplish this, note that your developers will need to update the thousands of rules required to collect this information.

2. Simplifying the Payment Process

Rather than making your global payments through individual banking portals, run all outbound payments through a single point.

Controlling payments from a single point is much easier and more secure than managing multiple payment branches. While this requires a programmatic interface to connect to the various bank rails, it ultimately reduces the manual effort and payment errors.

Centralizing payments also simplifies reconciliation processes later.

Tipalti’s global mass payment capability enables you to pay thousands of suppliers in a matter of clicks:

• Schedule Thousands of Payments
• Pay to 200+ Countries in 120 Currencies
• Supports Multiple Payment Methods
• Built-In OFAC and Other Sanctions Screening
• Enterprise-Grade Financial Controls