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International Payments Made Simple

by Cambridge Global Payments | May 1, 2017

The international payments landscape is changing rapidly, driven by the increasing use of mobile devices and ongoing technology sophistication. Both at work and at home, consumers are increasingly encountering user experiences on their electronic devices that are more intuitive and agile. This heightens expectations for enterprises to conduct business in a digital format. Banking services are no exception.

 Global payment trends

According to a recent report by the Pew Research Institute, approximately 50 percent of U.S. adults bank online and approximately one-third use their smartphone to do so.1

Similarly, global payment trends for SME and large enterprises reflect a dramatic shift in the payments mix from cheque to electronic payment alternatives. Studies indicate an average annual decline of -6.5 percent in the volume of cheque payments, offset by an average annual increase of 15 percent in the volume of Automated Clearing House (ACH) and debit/credit card payments.2

For context, in the U.S. alone, there is an estimated 217 billion payment transactions with a total value of U.S. $54 billion. Of this, cheque payments comprise approximately 50 percent of transactions by volume and 38 percent by value whereas ACH payments comprise approximately 9 percent by volume and 44 percent by value. Further, more than two-thirds of cross-border payments are made via wire.

Traditional banks are costly and inefficient

What do the above statistics tell us? The volume of ACH and wires payments are growing. However, the vast majority of these transactions are conducted through major banks. Unfortunately, this can make booking foreign exchange (FX) deals and initiating international payments expensive, time-consuming, and inefficient. This is because banks typically set higher transaction charges for international payment services than nonbank financial institutions. In part, higher bank charges could be considered to reflect more stringent regulations (i.e., banks might argue that they need to charge a premium to offset low interest rates and higher capital reserve requirements in the wake of the global financial crisis). Higher charges can also arise in circumstances where a bank elects to use a fixed daily conversion rate for currency exchange rather than live rates that reflect intra-day rate changes. Notwithstanding, the practical reality is that banks typically charge substantially higher fees than non-bank institutions for the same international payment. Accordingly, cost savings for reduced transaction fees can be significant, especially for organizations with higher annual transaction volumes.

Technology optimization drives efficiencies

 Significant cost savings and human resource efficiencies can be achieved when international payments are optimized by technology. For instance, there are innovative web-based solutions that help to simplify the complex rules for making secure international trades and payments. These technology solutions are designed to overlay with the organization’s existing accounting system and leverage its existing banking relationships for settlement.

International transactions are typically governed by complex laws, policies and regulatory requirements unique to each country. Advanced web-based platforms include robust beneficiary and country validation capabilities, such as the automated insertion of required fields with country-specific banking information. This eliminates the need to source or track unique banking and regulatory rules specific to each country and ensures that payments are accurately delivered to the intended recipient with reduced returns and investigations.

Key elements of an effective electronic payments solution:

  • Robust country-specific bank routing and regulatory data validation
  • Intuitive, agile web-based user interface with mobile device access
  • Ease of integration with existing accounting systems (e.g., SAP; Oracle; Microsoft Dynamics)
  • SWIFT and in-country payments with straight-through processing support
  • Secure, scalable solution from partial to full payments automation

Electronic payments solution integration

If your business is contemplating an electronic payments solution, a critical consideration is how the technology will integrate with your existing back office IT infrastructure. In larger organizations, it is not uncommon for such prior IT investments to be in the order of $100+ million. As such, care should be taken to minimize any potential integration issues. Sophisticated payments platforms are designed to provide a seamless online interface with your existing IT system. Accounts Payable (AP) staff would typically generate a single payment file (i.e., in TXT, CSV or XML format) from your existing accounting system for upload to the electronic payments platform via Secure File Transfer Protocol (SFTP). Payment files, with beneficiary and payment information, can then be dropped into a secure folder and automatically uploaded for supplier validation and custom remittance. Consolidated funding transactions are initiated via an Automated Clearing House (ACH) debit and can be reconciled against your AP sub-ledger. Where payments are transacted in foreign currencies to global suppliers, a reconciliation file will show the exchange rate and funding amounts for each payment.


Adopting an electronic platform for international payments is a significant opportunity for organizations to reduce costs and increase efficiencies. Key benefits include optimized transaction and currency exchange rates, robust bank and payment validation, and custom remittance options. The technology objective is to provide a simple, intuitive experience that guides the user through making international payments from the convenience of a desktop or mobile device. Scalability of the technology solution, whereby it is sufficiently agile to consider the unique requirements of your business, is the key to successful implementation.

1 Pew Research Center; 51 percent of U.S. Adults Bank Online, August 2015
2 Institute of Financial Operations, 2012 Global Payments Study

“Cambridge Global Payments” is a trade name, which in this document refers specifically to one or more of these legal entities: Cambridge Mercantile Corp., Cambridge Mercantile Corp. (U.S.A.), Cambridge Mercantile Corp. (Nevada), Cambridge Mercantile (Australia) Pty. Ltd.

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