USEND: Compliance Automation Critical in Making X-Border Payments Faster and Cheaper

The great digital shift has enabled all sorts of merchants, particularly small and medium-sized businesses (SMBs), to move beyond their home territories and cross borders to tap new markets.

Ran Grushkowsky, COO/CTO of USEND, told PYMNTS as firms move farther afield into other countries — and as payments speed up — complexity reigns and traditional back-office workflows no longer can keep up.

To that end, he said, businesses can outsource some of the more manual aspects of cross-border payments.

As Grushkowsky noted, with cross-border payments, “the biggest bottleneck is the human touch that oftentimes people believe is required.”

That’s especially true in the case of compliance, which he noted is a complex endeavor. There can be separate regulatory and compliance considerations on each side of the transaction, depending on where the sending and receiving financial institutions are located.

“The industry is realizing,” said Grushkowsky, “that, particularly on the ‘send side,’ you can automate a lot of these activities, but on the ‘receiving’ side it is a bit more challenging.” Each financial institution on that side of the transaction, he said — whether a bank or a licensed financial institution — can have its own compliance rules, around which protocols are built.

Platforms such as USEND’s, he told PYMNTS, can automate the screenings that are part of getting payments across borders; the platform can also build KYC and KYB functions into algorithms (or smart routing technology) that can ensure that proper procedures are being followed.

“We are able to essentially streamline the whole process,” said Grushkowsky, which in turn creates a positive ripple effect — fewer bounced transactions due to compliance risks. With a high level of automation, he said, as many as 90% of a client firm’s transactions, depending on the volume, can go through “automatically.”

With a nod to the recent acquisition of USEND by Brazilian digital bank Banco Inter, the goal is to foster “vertical integration,” which can help with increasing the speed of the transactions — which is important as the world moves ever closer to real-time payments. The banking services and merchant services being offered in Brazil, with an initial focus on that market, the U.S. and Europe, will be scaled globally, he said.

Getting Ready for Real-Time Payments

“When you’re talking about cross-border transactions, offering real-time payments requires having no humans involved in the transaction … this would essentially mandate that the companies will have this full automation across the board from the treasury management to the compliance piece,” he said.

The push toward real time, he predicted, will lead to optimal experiences where payments settle instantly and are low cost. To get there, and to adhere to the standards that are taking shape governing real time transactions (including more transparency), Grushkowsky said automation will become especially urgent for smaller companies that want to sell into new markets, or have to reconfigure their supply chains.

That means choosing the right payment service provider(s), he said — where whoever they use locally is going to be responsible for registering those transactions properly with the local tax authorities and keeping track of import/export rules.

Those smaller firms want to be able to accept customers coming from (and paying from) anywhere, noted Grushkowsky. When it comes to cards, he said by way of example, it’s important to process payments locally for better authorization rates; in other markets, alternative payments are critical. In still other markets, such as Brazil, installment plans are standard features within eCommerce.

“We see a lot of companies that work with us in the various markets we operate in … they ask for help usually after they’ve been done wrong. And they end up getting into trouble with local authorities,” said Grushkowsky. “So making sure that whoever they are with has deep understanding of the local markets — what’s accepted locally, what referred payment terms are, is definitely something that we see is becoming a bigger demand for smaller merchants — and larger companies, too.”