When you're transferring money overseas, the process might seem like it takes a lifetime. But why is this so? Money is nothing more than information. The question is, why does it take longer to send money internationally than it does to email? There are three leading causes behind this.
First and foremost, one currency must be exchanged for another. Second, compliance checks are required in order to avoid the payment of unlawful funds. And, finally, various payment systems communicate in a variety of languages. Costs, friction, and delays can all be associated with these procedures. Payment innovators and organisations like SWIFT are working hard to create better solutions and standards for data and messaging transmission and storage.
With the growth of cross-border e-commerce, businesses must be able to take payments from clients all over the world, regardless of location. As of 2022, it is anticipated that cross-border shopping would account for 5.4 trillion US dollars in sales and account for 20% of total e-commerce sales. Amazon and eBay are two of the most prominent online marketplaces for cross-border buying, primarily in North America and Europe, and they are both owned by eBay.
If you are a merchant conducting business worldwide, you need to be able to take payments from customers in all of the countries you are considering.
So, what are cross-border payments, and how do they work?
Cross-border payments are transactions in which the payer and the transaction receiver are based in different countries from where the transaction is being processed. Transactions can take place between people, businesses, or financial organisations that are attempting to move funds across borders. In order to accept cross-border payments, merchants will need to partner with a payment service provider capable of processing a diverse variety of payment methods.
- For example, you can make online payments easy by offering local and global payment methods. It is possible to make cross-border payments using various techniques, including credit and debit cards, bank transfers, and local payment options.
- The use of credit and debit cards is a popular choice among customers who want to make a cross-border payment since they are simple to use: users simply enter their card information and wait for the transaction to be processed.
- Payments made via international bank transfers are another option for sending money across borders. To conduct this sort of transaction, consumers will require the merchant's IBAN and BIC.
- E-wallets and other local payment methods can expedite overseas transactions, as can credit cards and other forms of cash.
How does a cross-border payment transfer operate?
In order to move funds across borders, banks and a diverse set of domestic companies collaborate to complete the transaction. When a transaction is made, a "correspondent bank," which represents the entity seeking the money, communicates with a "respondent bank," which represents the entity purchasing the item being purchased.
There are counterparts for every bank in each of the world's major cities in a different city. Consequently, money will first leave the buyer's bank and go to that bank's counterpart in the merchant nation, where they will be prepared for remittance to the buyer. The merchant's bank will then receive the money and it will be deposited into the merchant's account as soon as possible. These banks frequently collaborate with others to move money, which frequently entails more than four banking locations interacting with one another, traversing many currencies, and dealing with a variety of taxes.
What are the benefits of investing in cross-border payment solutions?
Customers want to make payments in an easy and familiar method, such as by credit card. As a result, it is advisable to research the preferred payment methods in the territories you intend to target. Depending on the country, international payments usually take between two and five business days to clear. The greater the number of financial institutions that the money must pass through, the longer it will take to complete the transaction.
You must identify all elements of a cross-border transaction if you want to run a successful worldwide business. These processes must be recognised and, if necessary, modified to ensure that the consumer has a positive experience while making an international purchase online.
As the number of individuals who own smartphones continues to rise worldwide, they have practically unlimited access to financial services and online payment solutions, with mobile wallets experiencing considerable and consistent development. Because of this expansion, the volume of cross-border business is expanding.
Cross-border payments: What the future holds
The market for cross-border payments has traditionally been dominated by financial institutions. Because there was minimal competition among the dominant global correspondent banks, cross-border transactions were fraught with difficulties for ordinary customers and companies alike.
As real-time cross-border payments become more widely accepted, techniques such as Visa Direct and SWIFT GPI will rise in popularity, and this will become more common. Strong Customer Authentication, mandated by PSD2 regulation, is another characteristic that makes cross-border payments more efficient. Payments made inside the European Economic Area will be required to go through a two-factor authentication procedure in order to authenticate the identity of the cardholder as a result of this new legal requirement.
Looking at the public opinion, it is recommended that merchants deal with a payment service provider that provides quick payment processing, transparent charge structures, a secure worldwide payment gateway, a variety of local payment options, and a variety of settlement currencies.
Turbulence always creates opportunities for winners and losers to emerge but, following a brief pause on activity at the outset of the pandemic in 2020, dealmaking rebounded strongly throughout 2021 and Bloomberg Business Week notes that global transactions are set to top $5 trillion by the end of the year.
These figures come despite economic volatility and the prospect of tougher competition regulation. Capital, appetite and opportunity have not been in short supply, and investors – particularly within private equity – have been keen to make up for lost time and put excess cash stockpiles to work. The low-interest rates environment is also a factor that has driven activity, alongside the abundance of capital flowing into the economy and chasing deals. This liquidity can also be explained in part by the availability of cheap debt. The coming together of these factors has created a strong pipeline of dealmaking activity and intense competition to get transactions done.
Tim Nye, head of corporate at Trowers commented: "Competition has been so fierce that pent-up demand has led to the amount of capital that can be put to work outweighing the number of deals available. The knock-on impact of this is that confidence has sky-rocketed and valuations have soared."
He adds: "These trends show no signs of abating, based on our conversations within the dealmaking community, and we, therefore, expect a continuation of strong M&A activity throughout 2022".
Dealing with change
The health, social and economic challenges created by COVID-19 meant that organisations of all shapes and sizes had to adjust their business plans and corporate growth strategies. For many, organic growth became more difficult and dealmaking, therefore, grew in importance as a primary option for achieving scale or entering new markets.
The ability to be nimble and agile during intense uncertainty and upheaval has been a key for success, and the best way to pivot into new areas over the past year has often been through merger or acquisition.
In certain sectors where disruption has led to huge changes in demand for services, consolidation and the birth of new market entrants have also provided dealmaking opportunities. Healthcare – and particularly HealthTech – has been an active sector as a result of spiking demand for services related both to the pandemic and to the maintenance of business-as-usual healthcare provision as backlogs grew in the wake of lockdown and other restrictions.
Elsewhere, Real Estate has been heavily impacted during 2020-2021 thanks to social restrictions inhibiting peoples’ ability to carry out a range of activities – from working in the office to visiting retail destinations and using leisure and hospitality venues. With smaller organisations struggling with this uncertainty, and the recent or impending withdrawal of government support schemes, some consolidation activity has occurred with larger entities buying up smaller rivals.
Other sub-sectors have been impacted differently, with industrial and logistics sites seeing spikes in demand thanks to the growing use of online retail and home deliveries as people were forced to spend more time in their own properties.
The ESG imperative
Towards the end of the year, COP26 took centre-stage in November, as world leaders gathered in Glasgow to discuss the changes and commitments that need to be made to achieve net-zero goals and turn the tide in the fight against climate change. The pandemic also helped to thrust ESG considerations into the spotlight, as the impact of an unprecedented global crisis was felt acutely in all corners of the world.
The role of corporates in driving the ESG agenda is vital. With governments, regulators, customers, employees, lenders, insurers and investors increasingly judging companies based on their ESG commitments, these themes are working their way onto the transactional agenda, too.
Just under two-thirds of respondents to a recent Trowers & Hamlins research survey identified ESG as either a significant dealmaking factor or an important factor ‘to a certain extent’, as pressure mounts for due diligence into potential acquisition targets to go deeper than ever before when analysing ESG issues. Large financial institutions from banks to insurers are factoring ESG risks into their pricing decisions, so an ability to demonstrate ESG credentials in those areas is becoming more and more important. With the direction of travel clear for all to see, savvy leaders will already be looking to get ahead of the curve on this to save themselves potential exposure later down the line.
Alison Chivers, corporate partner at Trowers explains: "ESG is an opportunity to set yourself apart from your competitors. If you’re not doing it, you risk finding it harder to get investment, financing or insurance. If you are taking the lead, you can expect to see the benefits.”
As we enter 2022, the embedding of recent and new regulation and guidance will only heighten the need for organisations across all sectors to get their ESG houses in order – this will cover a range of risk areas from working conditions, gender pay and executive remuneration reporting through to climate and sustainability policies. As data and disclosure in these areas become more sophisticated, potential transactions may be scuppered if the ESG numbers do not add up. This in particular is one strong trend from 2021 which we are expecting to become even more deeply ingrained in the minds of dealmaking decision-makers through 2022.
Compared to other crypto-based projects, the Ethereum blockchain currently provides a platform for the world’s second-largest digital currency called Ether (ETH). This digital currency is second only to Bitcoin and can serve as a means of payment between two parties without interference from a third party. However, many still have doubts about the Ethereum project and its feasibility in the long term. Others wonder: should I buy Ethereum?
If you are new to the Ethereum project, we urge you to read this article to understand better what the Ethereum blockchain offers. We will begin the article by explaining how a blockchain functions, what the Ethereum project is, and the Ethereum project’s applications.
What is Blockchain?
Blockchains serve as a decentralised register that captures all crypto transactions across a peer-to-peer network. Blockchain technology permits transactions to occur between two parties without the interference of a third party. It is essential to note that cryptocurrencies cannot function without blockchain technology.
For now, the primary application of this technology is for the transfer of cryptocurrencies. However, there are many potential applications for this technology in the future, like voting, settling trades, and many others.
Bitcoin uses its blockchain as a ledger for transactions. Unlike Bitcoin, Ethereum uses blockchain technology in a variety of unique ways. This brings us to our next question: what is the Ethereum project?
What is the Ethereum Project?
Before we consider what the Ethereum project is about, let's take a brief look at the history of Ethereum. Ethereum was officially founded in 2015 by Vitalik Buterin, Anthony Di Iorio, Charles Hoskinson, Mihai Alisie, Amir Chetrit, and many others. Its founders’ goal was to create a decentralised platform that functions without third parties controlling other parties’ activities.
Blockchains serve as a decentralised register that captures all crypto transactions across a peer-to-peer network.
According to Investopedia, “Ethereum is an open-source, blockchain-based, decentralised software platform used for its cryptocurrency, Ether.” Like Bitcoin, Ethereum has a digital currency that can serve as a means of exchange between two parties. However, the Ethereum project provides further features to its users.
Users can use the Ethereum platform to create smart contracts between parties. Similarly, this platform supports the creation of Decentralised Applications (Dapps) using the platform’s resources. Dapps design using the Ethereum platform is possible because the Ethereum platform also functions as a programming language that runs on blockchain.
To carry out any task on the Ethereum network, users must transact in Ether (ETH). This is because Ether is the digital currency of Ethereum. All transactions on the Ethereum platform are fueled by Ether, so the transaction fees on this platform are referred to as gas fees. The lower the transaction, the lower the gas fee. Similarly, the higher the transaction, the higher the gas fees.
Etheruem Blockchain Applications
As stated earlier, the Ethereum platform can create smart contracts and Dapps. You may then ask what smart contracts and Decentralized Applications (Dapps) are.
Smart Contracts
A smart contract is a type of contract executed by itself after all required conditions have been met. Usually, a smart contract’s terms and conditions are agreed upon between anonymous parties without the need for a centralised third party such as a bank controlling the transaction.
Similarly, all terms and conditions of a smart contract are written into lines of code and stored on the decentralised Ethereum network. The written code monitors and controls the execution of the smart contract. Similarly, the code monitors and tracks all transactions attached to the smart contract to ensure that all contract conditions are met.
Usually, a smart contract’s terms and conditions are agreed upon between anonymous parties without the need for a centralised third party such as a bank controlling the transaction.
The programming language used for writing the lines of code vary on the Ethereum network. The programming languages for writing smart contracts include Solidity, Vyper, and Bamboo.
When compared to traditional contracts, smart contracts are faster, cheaper, and secure. They also prevent undue influence from third parties. The applications of smart contracts are numerous and can be incorporated to provide decentralised services in financial services, healthcare, insurance, property ownership, and many other sectors.
Decentralised Applications (Dapps)
Another application of the Ethereum blockchain technology is the creation of Dapps.
As the name suggests, decentralised applications do not run on a central server. Instead, these applications run on the Ethereum blockchain which decentralises its servers, preventing the Dapps from having a central source. As a result, decentralised applications are not under the control of a single entity or organisation.
Dapps are software created using the Ethereum programming language known as solidity. This programming language is very similar to Java, C++, JavaScript, and Python.
The application for Dapps is endless as they can be used for creating decentralized solutions in fields like eCommerce, insurance, and online banking.
Conclusion
The Ethereum platform offers users the first decentralised blockchain platform in the world. The Ethereum network is very safe and secure and provides users with the opportunity to enjoy transactions without third parties’ interference.
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When compared to other cryptocurrencies, the Ethereum platform offers a lot to its users. Its blockchain technology is revolutionary. Similarly, the project has a solid team of developers and programmers behind it.
Presently the platform provides a digital currency for making decentralised transactions. Similarly, this platform provides users with the opportunity to enjoy smart contracts and decentralised applications.
In terms of potential the Ethereum platform is likely to see future growth. There are many applications for smart contracts in financial services, healthcare, insurance, property ownership, and many other sectors. Similarly, there are many uses for decentralised applications in fields like eCommerce, insurance, and online banking.
Finance Monthly hears from Stan Cole, Head of Financial Institutions at Inpay, on the progress that has been made towards creating seamless cross-border payment solutions.
Modern technology continues to advance at astonishing speeds, and recent years have given us plenty of remarkable developments in the fintech sector in particular. Yet, despite phenomenal progress in other areas, the trillion-dollar cross-border payment industry was stuck in the dark ages for an inexplicably long time. Banks and other financial institutions had to make do with outdated models, which slowed down international transactions, rendering them expensive and unreliable. And to make these frictions even more frustrating, many cross-border payment systems offered very limited transparency.
Improvements were long overdue, and thanks to rapid modernisation within the industry, customers are now enjoying a far better experience. However, we’re only at the beginning of the cross-border payment revolution. In fact, changes are expected to come even faster in the wake of the coronavirus. For example, Stephen Grainger, executive vice president of Mastercard’s New Payment Platforms, believes that global eCommerce will transcend the need for face-to-face transactions, while more remote and migrant workers move overseas, and more people enter the gig economy. “As the change becomes reality, it's the financial institutions that will be expected to step up and provide efficient cross-border payment systems that their clients demand — especially in regions where the need for trusted, reliable cross-border payments is increasing rapidly,” he explained to Business Insider.
With goods and services moving more quickly and across greater distances than ever before, customers are increasingly demanding cross-border payments that are as seamless and convenient as domestic ones. Huge progress has already been made and the future is just as exciting, and we’ll explore how all of that has transpired below.
How have cross-border payments modernised so far?
Cross-border payments have traditionally been the domain of correspondent banks. While these institutions are still major players in the industry, the rapid advances in technology and consumer demands mean that times have changed. With the click of a button, people are able to send emails, photos and videos globally, and these are received in real-time. Why shouldn’t consumers expect the same convenience when wiring money abroad?
With goods and services moving more quickly and across greater distances than ever before, customers are increasingly demanding cross-border payments that are as seamless and convenient as domestic ones.
There have been a host of new arrivals in the cross-border payments sector, so people are no longer forced to undertake a costly, slow, non-transparent international bank transfer. In lots of countries around the world, innovative services have made it possible to make an instant payment to a mobile number, email address or another unique ID form. This ID is mapped to the correspondent bank details, so in many nations, sending money is already as easy as sending an email. This marks a huge evolution from the traditional way of transferring money internationally.
In the face of stiff industry competition, banks need to embrace today’s consumer demands more than ever, and speed up their product propositions, reduce costs, and offer new, modern digital solutions if they are to retain their customers.
What does the future look like for cross-border payments?
Stablecoins
The future of payments is digital and tokenised, which explains why stablecoins have been gaining such popularity. These are cryptocurrencies that attempt to peg their value to an external reference, like a hard currency or commodity, in order to resist the high volatility usually experienced by the likes of bitcoin.
We have already seen this digitisation in action in South Korea, which has started to move from card to stablecoin payments. Likewise, Chinese central banks have partnered with e-money providers to test and provide central bank digital currencies (CBDC), vowing to launch a system like this before the 2022 Winter Olympics in Beijing. “As cross-border payments involve numerous players, time zones, jurisdictions, and regulations, they are often slow, opaque, and expensive, making us believe that an interoperable CBDC could play a role in improving cross-border payments,” explained Senior Editor Mirela Ciobanu in a feature for The Paypers.
However, it remains to be seen how large financial players in the current marketplace will respond to this shift. They could try to remain in the centre of such infrastructure and charge fees to their users for making transactions, or merely provide platform access to allow users to make peer-to-peer [stablecoin] transactions. We already know that Visa plans to help partners launch cryptocurrency services through its partnerships with wallets and exchanges, while Mastercard is also introducing cryptocurrency to its network, “allowing [customers] to transact in an entirely new form of payment”.
The future of payments is digital and tokenised, which explains why stablecoins have been gaining such popularity.
Blockchain & cryptocurrency
Incorporating blockchain into the cross-border payments space will help resolve key drawbacks of using correspondent bank transfers for overseas transactions. Banks that proactively adopt blockchain solutions will be able to attract and retain customers by offering cheap, real-time international money transfers that are more reliable and secure.
As Payments Journal notes in its feature on blockchain in cross-border payments, many issues with international transfers “stem from the high number of intermediaries in the form of correspondent banks that are involved in processing a transaction. Each additional intermediary drives up the processing fee, increases the number of failure points, and adds to the risk of fraud somewhere along the payment pathway”. Blockchain means these intermediary stages are not required, and the risk of fraud is significantly reduced, as all transaction information is stored on the network and is very difficult to modify.
A big obstacle to blockchain adoption has been its regulatory uncertainty. However, the situation is changing now that governments across the world are increasingly looking into blockchain, and developing CBDCs to distribute and receive payments outside of traditional banking systems.
Collaboration between banks and fintech PSPs
As an ex-banker and an ex-oil/gas professional, I like the analogy of banks being oil tankers — they’re big and strong, but take a long time to change direction when out at sea. The key issue here is that banks tend to rely on systems for international payment products which were developed last century, requiring customers to provide standardised legacy data. And as banking systems vary between different countries, one size certainly doesn’t fit all.
Fintech PSPs, on the other hand, are speedboats — fast and agile, jumping over the waves. Collaborating with these organisations means that banks can take advantage of the right data and access new instant payment infrastructures that are being created around the world.
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Having worked on both sides, my view is that banks and fintech PSPs both need each other. Banks have already acquired a long-standing, loyal customer base, and although fintech PSPs don’t yet have that in their favour, their freedom from client acquisition and legacy infrastructure costs lets them concentrate exclusively on product and service delivery. Therefore, teaming up with them enables banks to enhance their product offering, improve time-to-market, reduce costs, and retain their customers. Collaboration beats competition, and results in a win-win outcome for both sides.
For many years now, an increasing percentage of consumers have transitioned to using debit cards rather than cash. Many projections state that of all global currency, only 8% of it is physical currency, which shows just how prevalent and important the likes of credit and debit cards are to global economies.
Credit and debit card use is much more widespread than before, with users citing added convenience and time saving as major reasons, yet in 2020, COVID-19 has provided another reason for both customers and businesses to embrace cashless trading. By walking into essentially any store on the high street, you will likely find signs banning every transaction other than contactless payments, which shows that COVID-19 is accelerating society towards this cashless revolution.
Since the pandemic, many stores have opted for a cashless policy, whilst cash machine withdrawals have fallen by 55%. Due to the uncertainty surrounding COVID-19 and a potential second wave, this trend looks set to continue. Below, Southern Finance's Tom Simpkins explores the pros and cons of a business going cashless during the COVID-19 crisis, as well as what advantages going cashless may have for everyone after COVID-19.
Saving Time and Money
Just as many adhered to the paperless revolution a decade ago, deciding to go completely cashless removes the need for expensive equipment that would have once been considered essential. Shops would have little to no need for tills, nor would the likes of safes be standard when all transactions would be handled electronically.
Deciding to go cashless may save time, money and effort in the long run, especially as it looks like it may be becoming the new standard. After all, the beginning of the UK’s lockdown in March saw the use of physical currency in stores drop by approximately 50%, and with lockdown measures fluctuating, the rest of the country is seeing little reason to return to relying on physical cash.
Deciding to go cashless may save time, money and effort in the long run, especially as it looks like it may be becoming the new standard.
‘Staying ahead of the curve’ is always a wise move, especially if you’re trying to get a one-up over your competition. By embracing the new standard in an ever-growing cashless society, you can adjust to the new challenges that it brings, such as a focus on convenient technology. An example of this would be to invest in contactless payment points, digital tablets, and other equipment that can make life easier for customers and workers in almost any industry, ranging from the restaurant industry to retail.
Increasing Business Efficiency
Cashless transactions aren’t just efficient due to saving time counting out physical currency, it also promotes smoother transactions for businesses in general. By primarily dealing with cashless transactions, businesses will have less stress handling physical currency, such as handling bank deposits or concern over germs. Proof of this latter point was seen in China during the early lockdown efforts, as thousands of banknotes were destroyed from fear of being contaminated.
Certain businesses and industries such as those that specialise in transportation have already seen a boost in efficiency, so much so that it feels like there’s no going back from cashless for them. A prime example of this would be buses, as before COVID-19 there were various pushes to encourage using contactless card payments as opposed to paying in cash, yet now that necessity demands contactless payments this push has become much more important.
As to be expected, cashless transactions are also much more convenient for customers, thanks in no small part to the abundance of digital wallets available. Along with credit and debit cards, most smartphones are capable of being connected to bank accounts and serving as digital cards; the likes of Apple Pay and Google Pay are already immensely popular. By being able to make a payment by placing a phone against a card reader, customers can make everyday transactions quicker than conventional methods, like fishing out a credit card.
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Vulnerabilities with Banking Issues
Of course, no system is perfect, and some raise large concerns with a truly cashless society. From a reluctance to adapt to a cashless society to concerns with banking security, going completely cashless requires plenty of willing participants. While we’ll likely never see a day where physical currency is worthless, many are still confident in its staying power, along with the sense of security that physically holding currency provides.
Resistance to a cashless society isn’t new to the COVID-19 crisis, as the Access to Cash Review once called on the government and lawmakers to stop shops offering cashback, especially when the request was made without making a purchase. This continued push has persisted even to 2020, with the government’s budget in March detailing further protection for those that want reliable access to cash. Just as some don’t wish for a cashless society, many still rely on cash and face-to-face banking.
There’s also the age-old problem of disclosing too much information, as many fear that cashless transactions risk their banking information being stolen. Experts in the financial industry are attempting to address this issue, such as fintechs, who strive to assist electronic payments without the use of bank accounts. The truth is that when using cash, you don’t often grant the opportunity to access your banking details, and even the possibility of that happening is enough to put many people off the notion of a cashless society.
Is the Future Cashless?
While arguments can be made both in favour of and against a truly cashless society, COVID=19 has made it clear that many businesses can either thrive from it or need to go cashless to survive. The amount we rely on cashless transactions, as well as how common they become, may depend on how quickly we can handle and eliminate COVID-19, yet it’s becoming likelier by the day that the pandemic's impact will be long-lasting, if not felt forever.
Whether this extends to being a completely cashless society or not is yet to be seen, but for now it’s clear that during a pandemic and the lockdown going cashless is a safe move, no matter what industry it’s utilised in.
Digital sales from outlets like Target enjoyed an unprecedented 275% growth in recent months, according to the US Census Bureau. It seems that this is not an isolated case as businesses, especially ecommerce companies, are experiencing the same growth. With global currencies having taken a hit during the pandemic, it was uncertain as to what direction fintech would take. As it turns out, the world is now sprinting toward financial inclusiveness and eCommerce diversity.
The Need for Financial Inclusiveness in the International Market
Prior to the pandemic hitting, online transactions with cash-on-delivery (COD) options were highly popular for consumers around the globe. This, however, is no longer feasible in places like India and China where COD options are now disabled in order to minimise risk moving forward. As such, new avenues were needed and fintech answered the call. Fintech has long been regarded as a great enabler of financial inclusion by providing a reimagining of business models and processes, according to the World Bank. They believe that it is through fintech that suitable alternatives to COD will be found like crowdfunding, cashless transactions, and even peer-to-peer lending options.
Fashion Ecommerce Embracing Diversity, Accessibility, and Inclusivity
While ecommerce is not a new concept in the fashion industry, consumers are now more discerning, especially about diversity and inclusivity. Nearly 34% of respondents in an Adobe survey said that they boycotted a brand due to a lack of diversity in advertising, while another 61% said diversity is the key to good advertising. This isn’t surprising, as high fashion brands have had their share of controversies like D&G’s “Eating with Chopsticks” or Gucci’s balaclava jumper. As such, fashion brands that are enlarging their ecommerce presence are actively reforming their advertising and marketing to emphasise inclusivity, accessibility, and diversity. One method that fashion eCommerce is trying out is redesigning their websites to be more accessible to a wider audience. Another is using a diverse sample of models for visual ads on their ecommerce platforms.
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Mobile Phone eCommerce Developments
A survey by Merchant Savvy found that nearly 70% of all eCommerce is conducted through mobile phones. While that number is high, retailers report that conversion rates vary as consumers still express concerns over security and user experience. In worst-case scenarios, not even 1 out of 10 successful transactions occurs via mobile phone. To combat this, brands are aiming to develop hybrid apps to work well with browsers as regular apps take up too much memory on devices. There is particular emphasis on making phones a universal digital wallet for frictionless and seamless transactions. This, however, requires better security, infrastructure, and devices capable of supporting the whole concept. As such, more mobile phone eCommerce development is being planned by large brands like Amazon, Apple, and others.
With the world impatient to move on from the effects of the pandemic, the fintech industry is striving to make sure that they have what it takes to meet demand. The upcoming months can expect a lot of additional emphasis on financial technology development. With eCommerce now the norm in transactions, it is exciting to see how else financial inclusiveness, diversity, and online transactions shall take root and bloom.
Completing these notarisation-related tasks can be even more challenging if a corporate finance team has to search for mobile notary services using their own time and resources.
The good news is there’s a solution for the time-consuming nature of properly notarising a document. A mobile notary can ease the process, travel on-site, and verify high-profile documents. That’s super convenient under normal circumstances, but even more critical during times like this when people are working remotely during a pandemic or quarantine.
For those corporate finance teams debating the importance of a mobile notary, here’s an outline of how a mobile notary can serve you and save the day in the face of unexpected time crunches. When you’re ready to find a notary near you, keep these tips in mind to ensure that you partner with a reputable, reliable company that guarantees client satisfaction.
What is a mobile notary?
A mobile notary is a notary public who travels from one location to another to notarise signatures. Not only do mobile notaries adhere to typical business hours, but most of them can also work on weekends and after hours. Because a mobile notary can accommodate any working schedule, their on-site services can save a corporate finance team a significant amount of time and money. No longer are the days of lagging notary services.
While most people view recruiting a mobile notary as a difficult task, the truth is the process is quite simple. Multiple agencies can connect corporate executives to notaries.
How do mobile notary services work?
Typically, mobile notaries work with clients' schedules. Because a mobile notary travels anywhere, you won’t be limited to notaries in your local area. No matter where your locations are based, a mobile notary will come right to your doorstep.
Notary service fees are usually standardised. However, the costs can vary based on your location. A mobile notary can charge additional costs depending on your state of residence.
Because a mobile notary travels anywhere, you won’t be limited to notaries in your local area.
Benefits of using a mobile notary
Using a mobile notary can benefit your financial business in several ways, including the following.
Efficient transactions
When you're working in the finance industry, you know that efficiency is the key to success. Traveling from one location to another can be tedious and time-consuming, especially if you need to travel long distances. Instead of spending your precious time traveling or waiting in traffic, you can hire a mobile notary. Because notarisation is their full-time job, they can quickly travel to your preferred location to notarise your financial documents with ease.
A major incentive of a mobile notary is their flexible schedule. They can notarise your documents at any time of the day, including during regular business hours, after normal business hours, and during weekends.
Flexibility
Many notaries offer flexible scheduling and provide comprehensive notary services with no order restrictions—meaning you have the freedom to choose the kind of services you need and the time you need it. It also ensures that a corporate finance team can access additional assistance during their busy days, and avoid paying for unnecessary services during slower days. Such flexibility makes mobile notary services the best option, as they save you money and keep your business running efficiently. Most importantly, it keeps clients satisfied.
No location limitations
Many mobile notaries travel throughout the country. They will come to any given location: whether you are at home, your place of business, vacation home, office, or any other place you find comfortable. Time restrictions don’t limit these mobile notaries, so these trained professionals can make on-site visits anytime, anywhere, depending on your schedule.
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Reasonable costs
The cost of mobile notary services varies greatly depending on state laws. Each state has standardised fees that indicate what professionals can charge for their notary services. Mileage and travel expenses determine the overall cost. Regardless of the additional expenses a mobile notary service charges, the bottom line is that mobile notaries are cost-effective considering the energy and time you save.
Accuracy and efficiency
Mobile notaries are trained professionals who provide accurate and efficient financial services. Besides notarising high-profile documents, these professionals also provide client support and conduct follow-ups. By shaving off time spent worrying about the safety of your documents, you direct this energy towards your day-to-day operations. Without distractions, you’re free to tend to crucial responsibilities and ensure your customers’ needs are addressed.
Final thoughts
Thriving in the corporate finance world requires a commitment to the most minute details— which is why your corporate finance team must choose the right mobile notary for your business.
There are several reputable and reliable mobile notary agencies to choose between. Devote the time necessary to locate the most accredited agencies nearest your location. In your search, consider factors such as qualifications, reliability, credibility, costs, and flexibility to get the most out of your mobile notary services.
Andrew Durant, the head of the Forensic & Litigation Consulting team at FTI Consulting, offers Finance Monthly an analysis of the impending challenge to finance teams and advice on how they can overcome it.
Fraud was already shaping up as a big issue for businesses in 2020 before the COVID crisis struck. For instance, the Resilience Barometer 2020 research from my company, FTI Consulting (involving 2,000 senior executives) found that fraud was perceived as the number one financial crime, with 24% reporting being exposed to it.
This would mean that an enormous £28 billion was lost to fraud in 2019 alone by FTSE 350 businesses (based on an average loss on 5% of annual turnover - see 2018 ACFE Global Fraud Survey, Report to the Nations). Even at 1% of turnover, this would still be sizeable for victim businesses.
On top of this ongoing problem from fraud, in times of most global crises a spike in fraud typically follows. Sadly 2020 is going to be the worst year many of us will experience!
Why do more fraud cases appear after crises? A variety of reasons, such as an increased opportunity available to fraudsters with senior management teams rightly focused on other things, such as trying to keep their businesses afloat and their staff in jobs for a start.
Fraud was already shaping up as a big issue for businesses in 2020 before the COVID crisis struck.
What they will not be thinking about is the enemy within. And, in my experience, that is where the greatest risk lies. It is human nature to believe that threats arise from unknown individuals outside an organisation. However, it is more likely to be a fellow employee who knows the financial controls (and the weaknesses in them) and that you trust implicitly.
Crafty fraudsters will see 2020 as a ripe opportunity to pounce. In the current “lockdown” with increased home working, with corresponding less people at work overseeing finance, security and operations, fraudsters will have more opportunity, with less scrutiny, more freedom and fewer questions asked.
What can finance directors and their teams do to reduce the escalating risk of fraud? Here are three areas that seem simple but can actually make a huge difference to preventing and detecting frauds:
1. Encourage whistle-blowers to step forward
Most frauds are detected by tip-offs from employees, especially those who are involved in finance and procurement. Despite protections in place, whistle-blowers still fear that they will become the victim and either be exposed and/or lose their jobs. And, I don’t blame them. In many cases I have investigated, the immediate reaction of the company tended to be “who is the whistle-blower” or “they must have an axe to grind”, not “we need to investigate these allegations immediately and prevent further loss”.
2. Use of temps and contract staff should be monitored carefully
If a member of the finance department become unwell or need to take time off to care for a relative, it may be tempting to backfill with temporary or contract staff. Companies should ensure that they do not drop their guard and carry out fewer checks than normal. Fraudsters have been known in the past to target finance teams that have a higher propensity to rely on contract or temp staff.
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3. Be diligent in your transaction approval process
The lockdown now looks likely to continue in some form until at least September, so it is important that finance teams remain vigilant and check all transactions carefully, especially scrutinising carefully any:
- ’Urgent’ transaction requests – in a recent case this modus operandi was used to pay away $5 million to an offshore account;
- Transactions just below an authorisation limit especially if there are multiple payments to the same third party – if you spot this pattern, check back to the contract to see whether there are any “red flags” around the identity of the supplier, the tender process or the approval process ; and
- Journal entries that may be requested, particularly around month or other period ends. This is a frequent method to disguise transactions or to “boost” results.
Despite taking all the precautions listed above, organisations will still suffer fraud. Once discovered, taking the right steps quickly ensures a higher chance of recovering missing funds and a lower chance of losses continuing.
Do not make emotional or hasty decisions
Fraud involves a breach of trust and, therefore, as an employer you may feel betrayed by what has happened. As a result, you may be tempted to take immediate action which may ultimately compound the situation.
Therefore:
Keep an open mind
There may be a logical explanation for the discrepancy that may not be immediately obvious.
Discuss this with as few people as possible
You may be unwittingly tipping off someone involved in the fraud. If you do need to escalate or discuss your concerns, speak to the head of internal audit or legal department. Do not discuss it with a colleague, even if you trust them implicitly (see above regarding the enemy within).
Plan a course of action
The actions taken in the first hours and days after a suspect comes to light can ultimately affect the successful outcome of any action. As the finance director, you will likely have a fraud response plan in place. However, I wonder how many of them are collecting dust, probably also years out of date? Also ensure that senior management in each teams or location knows about the plan, have tested it (akin to a fire alarm, the plan needs to be tested to ensure everyone knows what to do and when).
Finally, I would advise finance directors and their teams not to ignore that “sixth sense”. If you start to feel uncomfortable about something, there is usually a reason.
So why did blockchain adoption take so long compared to other new technologies such as cloud and AI? The slow adoption in highly regulated, complex markets such as the financial services industry shouldn’t come as a surprise. Blockchain is suited for complex, collaborative, multi-party, and critical application use-cases. This is another big reason why blockchain adoption has taken much longer than some predicted, as Rob Coole, VP of Cloud Technologies at IPC, explains below.
Next-generation blockchain
Next-generation blockchain organisations are leading the way showing how the technology can be used intelligently for the world we live in today. For example, R3, an enterprise software company, is working with an ecosystem of over 200 financial institutions, regulators, trade associations, professional services and technology companies to develop Corda, a Blockchain platform designed specifically for businesses to deliver two interoperable and fully compatible distributions of the platform that addresses issues such as transactional certainty, data privacy, and scalability limitations.
Gartner predicts that blockchain will be fully scalable by 2023. IPC’s sense of the future of blockchain, particularly in the enterprise space, is just as positive. We are seeing customers truly learning about the practical reasons to deploy, leading to more investment in time and money in blockchain.
Importance of complementary partnerships
Both application service providers and subscribers should partner with service and product providers at an operational level integration to be ahead in the blockchain curve. Real value is provided with the integration and support from the hyper-scale platform community such as Microsoft Azure and AWS together with open industry platforms, such as IPC’s Connexus Hub, that creates end-to-end solutions that solve business problems. The importance here is APIs. We believe in a API partner integration approach which gives institutions the ability to easily access data, provide insights and inspire innovation for the market need.
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Service providers, like IPC, can play a critical role here by supporting operationalisation in the systems-oriented context. Such providers are a natural connector embedding connectivity to key market participants. IPC, for example, enables access to all asset classes with over 2,000 sell-side firms, 4,000 buy-side firm and 75+ exchanges in its vast, diverse ecosystem.
What’s next?
COVID-19 has provided a ‘new normal’ that is impacting every aspect of our lives. Though this pandemic is devastating from a health, societal and economic perspective, blockchain may help the global economy rebound. The World Economic Forum believes technology such as blockchain “will benefit all countries currently impacted by COVID-19”, as it provides an efficient approach to reduce trade cost on a global scale.
Digital initiatives such as blockchain is non-partisan and open to all which allows users to act quickly at low cost with low barriers for innovation - all valuable factors in supporting the economy in an economic downturn. So, although blockchain adoption was slow in its early stage, 2020 seems to be the year blockchain comes of age.
Moorwand and K Wearables announced on Monday their intention to give away 300 “K Rings” – contactless pay providers in the form of a ring – to NHS staff in a display of gratitude for their work in combating the COVID-19 pandemic.
The rings are designed to facilitate contactless payment by having their wearers imitate a knocking gesture over a card reader, which can be used to trigger transactions up to £45 in size.
By removing the need to touch a surface, contactless devices present a safer payment alternative for essential workers amid a global health crisis.
Moorwand’s chief commercial officer, Luc Gueriane, commented on the giveaway: “We are in a time where community is at the forefront of everything we do. Although we may be apart, we as a nation have never felt more connected, so it is vital that communities and businesses come together to support health workers in any way they can.”
“Partnering with K Wearables to provide an easy payment solution to 300 NHS workers was instantly an initiative we knew we wanted to be part of.”
“K Wearables offered 100 free contactless payment rings to NHS frontline heroes, so the team could show its gratitude and we were overwhelmed with the immediately positive response”, added Philip Campbell, founder of K Wearables.
“We were delighted when our new issuer, Moorwand, generously offered to help extend this to 300 rings for NHS workers. It's great to be working with likeminded partners and we hope the recipients enjoy using K Ring as much as we all do.”
Subscription models now extend into everything from the automotive to the supermarket industry and include everything from pet food to virtual spin classes. Alongside online advertising, subscriptions are a business model that has exploded in popularity, because monthly digital payments provide more long-term recurring revenue streams than one-off sales and generate long-term online customer relationships. 10 million people signed up for Disney+ within 24 hours of its November debut, and Salesforce.com is valued at around $140 billion, giving some illustration of the commercial success of the subscription model.
However, the model is now in danger of becoming a victim of its own success, with industries heading hard and fast towards a ‘peak subscription’ cliff edge. There is simply a finite limit to the number of services people and businesses are willing and able to subscribe to. Customer recruitment and retention is extremely difficult because subscriptions can be an expensive, long-term commitment; half of subscribers to e-commerce services cancel within six months. At the same time predatory practices such as those in smartphone apps make consumers increasingly wary about “subscription traps.” Finally, the subscription economy is excluding billions of people who cannot afford expensive long-term contributions. For the newspaper industry, this means not only shrinking the potential market but denying all but the relatively privileged access to the independent information that is vital for democracy to operate. It also means denying industries the ability to offer ‘low-hanging fruit’ of smaller, cheaper transactions for more limited services and thus denying them access to a far bigger customer base. Professor Aggelos Kiayias, Chief Scientist at IOHK, suggests how new technology could provide an alternative model.
There is evidence that ‘micro-transactions’, where people have the option of paying tiny sums, as little as a fraction of a penny, for individual services such as songs or articles, can cumulatively offer a rich revenue stream. Free-to-play mobile games generated $88 billion through other services such as ‘micro-transactions’ in one year alone. Mini-transactions also form a potential ‘gateway’ to a bigger subscription market by offering initial ‘taster’ services to a wider audience.
A key barrier to this has been that slow transaction speeds and high transaction fees make ‘micro-transactions’ unviable as a lucrative revenue model across all industries. Even the fastest, VISA, can only process some 24,000 transactions a second. The blockchain space has also hitherto offered little in the way of a solution because of the so-called ‘scalability problem’ which seems intrinsic in the protocol design of systems like Bitcoin. This makes transactions slower and fees higher, the more users are added to the network.
Free-to-play mobile games generated $88 billion through other services such as ‘micro-transactions’ in one year alone.
A New Model
A recently announced system based on a “proof-of-stake” blockchain discipline, dubbed Ouroboros Hydra, is set to challenge the subscription economy and enable a new payment model which has potential to revolutionise the financial services industry. The third-generation “layer-2” protocol will allow parallel processing of transactions to take place at the physical limits of the network without compromising security or relying on energy expensive “proof-of-work.” This could allow the blockchain to scale to process millions of minor to major transactions on cell phones, outpacing conventional payment systems used by current subscription services. Unlike conventional “layer-1” blockchains, its overall transaction processing throughput can get faster as the number of nodes in the network increases.
With revenue models based on digital advertising and subscriptions nearing a cliff-edge, such high-speed third-generation blockchains could allow new industries to emulate the mobile gaming industry’s ‘freemium’ model, allowing users to pay for extras to their basic service. Customers will be able to pay in cryptocurrency rather than fiat currency. A set of simulations conducted as part of the research announced, show the system demonstrates sufficient transaction speeds to minimise transaction fees, facilitating ‘micropayments’. This opens up the possibility of an alternative to the subscription economy.
Access for All
A genuinely decentralised and scalable blockchain protocol could create an economy based on millions of ‘micro-transactions’. On an individual level, online newspaper readers could pay per article rather than paying a set amount per month, or gamers could buy virtual items within a game for fractions of a penny. Companies can also engage in more fine-grained business-to-business exchanges. This new protocol can therefore open up online services for people who may otherwise be unable to afford them, opening up a bigger mass market to industries, or systems for which so far it was uneconomical to do so. ‘Micro-transactions’ provide a way to ‘on-board’ people as longer-term customers as well as providing an alternative revenue stream to subscription.
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Limitless Potential
Importantly, Ouroboros Hydra is not just a transaction processing system. It is capable of offering smart contracts as well which means it would be possible to encode and enforce various policies related to the ‘micro-transactions’ processed by the system. The result is a flexible design that can also accommodate any elements of the subscription model for those participants, users and businesses alike, who prefer it. Furthermore, taking advantage of suitably crafted smart contracts, novel business models can be developed hybridising between the two approaches and thus allowing innovative and highly tailored and personalised engagement between businesses and customers.
What Next?
This is only the start. Decentralised and scalable blockchain protocols could enable millions in the developing world to enjoy access to previously inaccessible financial services, such as remotely paying for vital services like utilities and healthcare. In this way, we can pave the way towards a more inclusive, truly decentralised, people-centric banking system, which can form the future backbone of financial services.
While it may sound obvious to conclude that the net profits of a business are the most important indicator with which to measure a company’s worth, the reality is that cash flow is just as important, and sometimes even more so. There are a lot of reasons for this – one would be that profits can be manipulated in the income statement more easily than cash on hand can. Net profits may be seen as a theoretical concept, while the cash that is accessible to the business is the more concrete way to see how an enterprise is actually doing.
Consider how profits can be determined largely in non-cash terms – they can be in the form of assets such as receivables. Some of these decrease in value over time, which limits the accuracy by which profits are measured. Some receivables can even be totally insignificant in the future – if for example a client pays too late, or worse, if they don’t even pay at all – then the asset that determines the value of the corresponding net profit decreases, which decreases net profit as well. This is the reality of business – that is why it is important to manage your cash flow wisely.
Cash flow measures the liquidity of an enterprise – and this is indicative of your overall paying capacity. The bigger the amount of cash the business has on hand, the more reliable they appear to their employees, suppliers, and other creditors – these entities can rest assured that they will be paid their due in a timely manner.
These are just some of the reasons why it is important to effectively manage the cash flow for your business. Here are some ways you could do that:
1. Collect your receivables as soon as possible.
If possible, have your customers pay immediately upon delivery or before they receive the goods or services they ordered from you. Prepayment is the best option, and it works – this is how most eCommerce businesses conduct their transactions. They usually ask for proof of payment before they deliver the items to their customers.
If possible, have your customers pay immediately upon delivery or before they receive the goods or services they ordered from you.
If prepayment is not possible, push for cash payments upon delivery. This is pretty reasonable for most retail-scale businesses.
For industry-scale trading, where the volume of goods and/or services and the corresponding amounts are considerably larger, do your best to get the shortest payment terms from your customers as possible.
Invoice them as early as you can. This will ensure that you have done your part in guaranteeing timely payments. It will also show your clients that you are taking your collections seriously. This is the best way to be professional about your intentions.
2. Get more flexibility in terms of your payables.
You can ask your suppliers to extend you credit terms, and you can attempt to make this as long as they will allow. This will let you be able to keep your cash in your hands for as long as possible, giving you leeway to pay for more pressing concerns. Just make sure that you don’t miss your deadlines, as some suppliers may charge interest rates for overdue payments. This is something you should avoid at all costs – as it will defeat the purpose of the exercise.
3. Consider selling your receivables in order to get cash up front.
If you have initially already extended credit terms to your clients, you may find yourself in need of reprieve in future situations. Some clients may also be unreliable in terms of meeting deadlines. You have the option to sell your receivables to get the cash you need immediately. For example, some staffing companies enroll in payroll funding, where the financing company purchases unpaid invoices from you, allowing you to have cash 24-48 hours after the invoice is presented for sale. Sometimes, you can even get your money within the same day if you request this specifically.
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This is a great way to manage your cash flow more reliably. If you have a long list of creditors, with receivables that won’t get settled any time soon, this may be a viable option for you.
4. Figure out ways to increase revenue.
You can get creative in terms of how to get more cash-based sales, so at least you have a steady flow of liquid assets. Offer discounts for cash on delivery or prepaid transactions; give incentives for customers who pay on time; and conversely, set minimal penalties for late payments, just so they’re encouraged to meet their deadlines, and be faithful to their terms.
These are just some of the preliminary guidelines that can help you manage your cash flow better. Remember that there are small ways you can tweak your cash flow to work in your favor, and explore workable options that will help lighten your load.
