Payments International Image Credit Pixabay\GeraltInternational payments remain a key barrier for UK SMEs trying to conduct business abroad. The findings come from Airwallex and are based on a survey of 500 SME firms conducted by Censuswide.

Post-Brexit, the complexity of international payments increased. 53% of respondents view international FX fees on cross-border payments as a pain point that takes too much effort to workaround. Another 26% think they are a pain point that cannot be avoided. Overall 70% believe that hidden fees are a “necessary evil” of doing business across borders. Is managing payments in foreign currencies the answer? No! 58% said paying international suppliers in their local currencies is a headache.

Other pain points include managing:

  • Supplier payments in various currencies (28%)
  • Subscription or expense payments in various currencies (28%)
  • Payroll in various currencies (23%)
  • Or not having one comprehensive view of payments across multiple markets (22%)

International expansion inevitable

The findings come at a time when UK firms are looking beyond the borders of the UK for expansion. SMEs want to win net-new customers (54%) and new suppliers (45%). The planned expansion is near shire in Europe (62%), further afield (38%), with 77% looking to expand in total. It might have been interesting to see if the further afield was primarily the US, anglophone countries or somewhere else.

Jed Rose, GM, EMEA at Airwallex
Jed Rose, GM, EMEA at Airwallex

Jed Rose, GM, EMEA at Airwallex, commented, “As businesses throughout the world have been impacted by the pandemic, more innovative, tech-driven strategies are giving them the opportunity to enhance their globalisation efforts.

“Whether it is the ability to open accounts in new markets within seconds, or combining all international payments into one platform for greater control and flexibility, identifying tech platforms that can enable end-to-end solutions which support business expansion across borders can facilitate sustainable future growth for businesses of all sizes.”

Enterprise Times spoke to Rose to find out more

The Airwallex view

How does Airwallex view the pain points?

Rose answered, “One of the biggest pain points around international expansion is when businesses open accounts with new banks and providers in foreign markets. That results in significant inefficiencies through the systems not talking to each other in a seamless way. It’s critical for businesses to be able to grow without borders through working with a single provider that can take care of all needs.

“Furthermore, not having one comprehensive view of payments across different markets makes it difficult to assess and keep on top of cash flow. Nearly two-thirds of research respondents agreed that businesses without a real-time view of expenses, transfers and all other transactions were not firmly in control of their finances.

“This can spell disaster for SMEs, not just from a financial perspective but reputational as well – with both customers and suppliers. In competitive sectors, businesses cannot afford to lose this control.”

Are hidden fees a necessary evil?

What are the “hidden fees” that are a necessary evil?

“Most payment transactions involve multiple banks and many service providers. This results in transactions that take longer to process and could require fees to speed them up. It also results in many fees taken along the way, meaning that the end amount that lands in the final account looks very different to the starting amount.”

How does Airwallex address that pain point?

“Through our banking network that has been built from the ground up, we have integrated with financial partners around the world to bring a level of transparency and efficiency appreciated by businesses of all sizes. Delivering a full product stack experience enables businesses to make the best decision for their needs.

“Our customers usually save up to 80% versus high street banks and get their funds faster through finding more efficient routes for funds flows. Essentially, making payments digitally will enable customers to focus their energy on growing their business, without having to worry about the costs that might come with a traditional payment transaction. “

Why use a payment provider rather than your primary bank?

“While working with a traditional bank has its benefits, customers are often limited by that bank’s services and footprint in desirable markets. Payment providers aim to eliminate the unnecessary middleman for transactions, save costs, and make the entire process easier, by tapping into a broad international payment network.

“In this way, the customer can enjoy end-to-end financial services without needing to work with multiple banks or providers.

How to benefit and why

Two-thirds of respondents believe that digital solutions can provide the answer. 66% believe doing so will deliver a competitive advantage. One of the promises of digital adoption is its transparency across payment types, including expenses and transfers. Rose also sees this as a key advantage saying,

“Another benefit is transparency. Even though there are moves to improve this within the traditional banking system, complex processes can often confuse end-users – especially those who sell and buy from multiple markets.

“Instead, payment providers, such as Airwallex, provide a single pane of glass for all transactions. So customers can not only quickly and easily make payments, but also ensure their cash flow is consistent and is easy to forecast.“

If hidden fees are removed, cash flow forecasting becomes easier. The study also looked at what else businesses would spend any spare cash on. 75% of UK SMEs would invest that freed-up budget back into their business.

  • 21% would invest savings back into staffing
  • 17% would opt to invest in marketing,
  • 17% would invest in product development
  • 12% would invest in facilities, such as office expansion

Enterprise Times: What does this mean

Surprisingly only 7% of respondents have already moved all or the majority of their finances away from traditional banking to a digital fintech platform. This inertia is something that Airwallex would like to change. Highlighting the benefits of digital payments is one way of doing so. SME’s are listening. 68% said they will consider the change and 44% plan to do so in the next 12 months.

The race is on. Airwallex and competitors will want to win new clients. The traditional banks will make acquisitions or introduce new services to retain their customers and profits. With Open Banking, the market is changing, and banks will need to consider carefully how they run their businesses and obtain their profits. The Neo-banks and new entrants actively reduce margins for business and consumer customers—good news for businesses and individuals.

This study was focused purely on the payments angle of internationalisation. While this has validity, it is not the only challenge faced by SMEs looking to internationalise. Hopefully next time Airwallex runs the survey it will also have a wider scope around the pain points of internationalisation. These could include language, culture, legal and other financial barriers such as taxes which are equally, and perhaps bigger barriers.


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