API Plug-Ins Offer Fast, Cheap Fix To Cross-Border Payment Pain Points

With eCommerce growth expected to continue after the pandemic ends, businesses are pressed to support an increasing volume of cross-border transactions. Application programming interfaces (APIs) can help streamline cross-border payments operations and help financial institutions (FIs) and eCommerce businesses address the most complex cross-border payments frictions, such as authentication, payments processing and regulatory compliance.

This is just one of the key findings examined in The New Singularity: Leveraging API Innovation For Cross-Border eCommerce Growth, a PYMNTS and USEND collaboration. Using a third-party API solution, for instance, users can pay or receive refunds in local currencies directly in apps or via their websites. API solutions also help banks become more agile, more innovative and better able to support customer needs, increasing their potential to provide enhanced, streamlined information sharing and payment solutions.

More key findings from the study include:

APIs help deliver more streamlined business-to-business (B2B) and business-to-consumer (B2C) payments and enhance efficiency in payment transactions. APIs’ connective capabilities allow businesses to integrate their payments systems more easily with third-party payment service providers (PSPs). PSPs then access bank data or data in a business’s existing enterprise resource planning (ERP) software or accounting system and use it to streamline and even automate the payments processes they provide. APIs can access payment beneficiary information, validate beneficiary bank details and apply and adjust exchange rates, addressing several cross-border frictions in one simple step once a payment or invoice is approved.

APIs ease regulatory woes and help eradicate many cross-border compliance problems. An API solution can provide instant access to critical regulatory information by responding to a specific query and inputting the relevant data. When integrated into banking systems, customer relationship management (CRM) software and other digital platforms, regulatory compliance APIs can deliver automated cross-border compliance at any phase of an eCommerce transaction.

APIs help eCommerce businesses alleviate cross-border payment frictions, enhance the end-user experience and keep transactions transparent, simple and secure. When users interact with a platform or a mobile application, API algorithms store personal information about users and their behavior. Enterprises can then use this data to personalize their services and products or to create new businesses. They can also use APIs to gather data and predict consumer behavior, providing insight into new business opportunities as users interact with a mobile app or website.

To learn more about how FIs and FinTechs can leverage APIs to support smooth cross-border transactions, download the playbook.