Making Cross-Border Transactions Smoother With APMs

In a highly connected world, commerce knows no borders. From all around the globe, businesses are reaching out to new markets and carving up a piece for themselves.

While plenty of opportunities are available, payment remains a significant problem for most merchants. Whether you're a brick-and-mortar business with overseas customers or an eCommerce store looking to access foreign markets, processing payments from overseas sources is surprisingly complicated.

So, with all that in mind, let's look at some of the difficulties merchants face nowadays and why alternative payment methods (APMs) are the way forward.

Cross-border transfers via traditional banks rely on multiple intermediaries to function, which incurs extra costs. These include forex and admin fees and regulatory charges, which can quickly reduce your profit margins.

For example, you have a Korean customer who intends to purchase a shipment of frozen durians from your company. But as you're Singapore-based, you source most of your product from Malaysia and Indonesia, which forces you to rely on overseas bank transfers.

At the same time, the same also applies to foreign customers looking to purchase your products. All of which reduces business revenue and increases expenditure.

Another issue most business owners have with cross-border payments is the poor FX rates offered by financial institutions, as banks and financial institutions provide rates specially designed to maximise profit.

Naturally, you'll find yourself on the losing end whenever you perform overseas transactions. While there are ways to lock in currency exchange rates, the volatile nature of the forex market and the cost of options may put off some merchants.

There's also the fact that forex options are not 100% foolproof. While contracts can cover the risk of adverse forex conditions, there's always the possibility that the market may move in a direction unfavourable to the holder.

This would cause merchants to suffer a loss as they have already paid a premium to enter into the contract, thus making options impractical for smaller-scale businesses.

Besides incurring additional costs, cross-border payments tend to have longer processing times as various parties are usually involved at all transaction stages.

And when you factor in time zones and public holidays, it's easy to see why transactions get delayed. And in a time where funds can be transferred instantly between local banks or e-wallets, a waiting period of two to four working days is just unacceptable.

Such delays are disastrous for time-sensitive deals and can hurt a business's cash flow.

Giving customers the confidence and peace of mind to proceed with their transactions is essential for forging new business relationships.

Unfortunately, cross-border payments are one area where cyberattacks are rampant, as banks and authorities can do little to recover any lost funds. Thus, it's easy to see why customers hesitate to make payments on a system they do not trust.