How the Cloud Streamlines Cross-Border B2B Payments

Cloud-based innovations are at the forefront of leveling the playing field for international commercial transactions.

That’s why PYMNTS sat down with Paul Chang, Head of Payment Networks at Amazon Web Services (AWS), and Neil Drennan, CTO at Visa Cross-Border Solutions (the business division created after Visa’s acquisition of Currencycloud), to get their perspective on the cutting-edge digital transformations that are unlocking new opportunities within cross-border B2B payments.

Chang shared two key trends observed in the B2B cross-border payments industry. The first trend is the modernization of payment platforms by businesses that are “decomposing legacy applications into microservices” and “building orchestration layers” on cloud platforms.

This transformation enables them to partner with FinTech companies for various services, including real-time foreign exchange (FX) engines like Currencycloud.

The second trend Chang highlighted is the remarkable growth of global B2B eCommerce.

Marketplaces and platforms targeting online businesses are projected to drive a 120% growth in B2B cross-border eCommerce from 2023 to 2030. B2B cross-border eCommerce will become the largest key segment for consumer and B2B cross-border payments by market size. The platforms supporting B2B cross-border eCommerce offer additional services such as inventory management and financing, making complex transactions more streamlined and efficient to drive customer stickiness and lifetime value.

“The cross-border B2B market is growing massively,” Drennan said. And that means there are more businesses than ever looking to “[move money around the world] quickly and transparently, with complete clarity around costs — what the FX rates and fees are.”

“Once the money has left the bank, it is crucial to provide transparent tracking throughout the entire process, which has historically been extremely difficult with the infrastructure that has been available,” Drennan said.

Cross-Border Payment Use Cases and Pain Points

While cross-border B2B money movement has long been subject to historically intractable problems ranging from dauntingly complex local regulations to fragmented payment infrastructures, ongoing innovations in payments and technology are changing the narrative while offering organizations looking to grow globally a new chance to do so.

“What we hear from banks and the needs of their corporate and small business customers are frictions around complexity of setting up bank accounts in every international market they operate in. We are seeing the demand for virtual accounts, to set up faster and be able to accept in the local currencies. In addition, businesses are looking for integrations to tie those accounts and payments to their ERP [enterprise resource planning] and accounting systems,” Chang said.

Drennan noted that Currencycloud offers a range of services, including real-time FX, multi-currency accounts and more. By operating in the cloud, it is possible to “deploy our capabilities in a much more scalable and secure way,” he said. Currencycloud ensures it is as secure as on-premises by adhering to the Visa cybersecurity team and operating under the overall Visa security standards.

As the world is changing in terms of regulatory requirements around data sovereignty and GDPR-type requirements, Currencycloud has the flexibility within its deployment model to be able to deploy its platform into other regions around the world, he said, adding that it gives the company a lot of flexibility that otherwise would be difficult if it was to build private data centers from scratch.

The benefits of operating internationally across a cloud-based platform transcend many legacy cross-border frictions. The infrastructure allows Currencycloud to offer a multi-currency bank account that provides 30+ different currencies to enable businesses to be global but act locally.

Cloud-Driven Cross-Border Platform Upgrades

Compliance with regulatory requirements is streamlined thanks to the ease of accessing and reporting on data within the cloud environment.

“It allows for a very strong basis by which reporting tool sets can be built to meet different regulatory requirements — which are often similar, but not quite the same. Firms end up doing different reports for global regulators, but by leveraging the cloud businesses can expose the data up in a way that meets the specific format requirements for each regulator at the cadence they need it,” said Drennan.

Additionally, today’s future-fit innovations, including artificial intelligence (AI) and machine learning (ML) play a crucial role in optimizing cross-border payments.

“We’re seeing sophisticated usage of AI within accounts receivable and account payable software. For example, accounts payable software leveraging AI to digitize the invoices, into standard formats for two-way or three-way matching with purchase orders and receipts. For the accounts receivable software, they are enabling AI to match the payments with the remittance information and invoices aligned for reduction in time to get paid,” said Chang.

“This is critical in B2B cross-border payments, which are often complex and have negotiated terms between the buyers and sellers,” he added.

AI and machine learning algorithms can predict transaction flows, enabling businesses to anticipate and manage cross-border transactions more effectively, as well as monitor transactions in real-time, identifying suspicious activities and ensuring compliance with regulatory standards.

Cloud-Based Architecture for Scalability and Resilience

Cloud-based money movement architecture, particularly when hosted on AWS, offers several advantages in terms of scalability and resilience that are better than what most organizations would do in a private data center environment, Drennan explained.

Cloud-native technology allows for flexible deployment across multiple regions, ensuring data availability, even in the event of data center failures. This approach simplifies disaster recovery planning and minimizes downtime, he said. In a single AWS region, Currencycloud deploys active-active-active across three availability zones. In addition, Currencycloud is doing cross-region data replication with a P95 of 30 milliseconds, which gives cross-region disaster recovery capability in the event of a black swan event and helps reduce the impact on clients.

That’s the underlying infrastructure layer. Then on top of it to ensure a resilient system, Currencycloud performs chaos engineering practices to deliberately try to break the platform.

Every Friday, the team introduces different scenarios into the system to see how the system reacts, how the business operation teams react, the mean time to respond to the failure and whether the system auto-heals. As a result of the production simulation, they come out with any remediation items to be completed to continuously enhance the system.

“With underpinning technology that has been designed for resilience from the onset and embedding chaos engineering and failure modes and effects analysis (FMEA), you end up with a much more resilient system than you otherwise would have had,” Drennan said.

For businesses seeking streamlined, secure, and efficient cross-border money movement solutions, the future looks promising.