However, international payments involve various unique complexities, such as:

• the geographical distance between the parties,
• different time zones and currencies,
• complex processes to handle international payments,
• large teams working largely on excel sheets.

There has been an unprecedented change in the way these payments are done, too. Earlier, banks handled it by themselves. They used wire transfers, among other ways, to make international payments. The shortcoming of wire transfers, however, is the lack of transparency. The money trail is quite hard to follow when it comes to this method of payment, which makes it easy for the black market to proliferate.  Now, however, banks have started outsourcing international payments. This has enabled the processing of payments to become more efficient.

Challenges faced by banks

When it comes to wire transfers, since there is a transfer of cash option available to the depositor, there is no accountability in terms of the source of cash. Also, the identity of the depositor stays under wraps. If there is a delay in processing international payments, the currency fluctuations in that time period would affect the accuracy of the payments. If the system involved in enabling payments is not easy for the bank employees to use, there could be errors in the payments. Using technology would be the only way to counter these problems. Thus, due to issues with speed and ease of payments, not to mention the low level of transparency involved, outsourcing international payments has become popular.

How does outsourcing help?

Outsourcing the payments involves hiring payment service providers. These payment service providers typically use a software as a service model and form a single payment gateway for their clients to multiple payment methods such as credit card, direct debit, bank transfers etc.  The use of software for foreign currency payments speeds up the process for transfer of money, thereby allowing less time for currency fluctuations while money is in transit. Also, outsourcing payments is a more cost-effective option for banks as they don’t have to set up the machinery required for the processing the payments. Moreover, they don’t have to handle the breakdown of the system if and when it happens. So, banks can spend that time in providing excellent service to its customers and focussing on its core function.

Another option is automation. Take, for example, Cymonz, a currency and payment software. This software provides the most cost-effective and efficient way to transfer money on an international level. With Cymonz, clients of banks or currency companies can offer currency payments under their own brand but without having to run their own currency divisions. Cymonz allows for the complete automation of processing international payments. It also offers white label services.

Banks using software applications for international payments, such as Cymonz, don’t have to worry about security and speed of transfers as that is handled by the software itself. This takes a great deal of work and responsibility off the bank’s employees as the back office management, including reliable customer support, is taken care of.