Cutting Through The Cross-Border Payments Confusion
The world doesn’t lack for stories about cross-border payments gone wrong. As North Lane Technologies CEO Seth Brennan told Karen Webster in a recent conversation, we’ve all heard the horror stories about someone trying to do something relatively simple, like send $100 to a family member in another country. In some examples, by the time the money went through all the byzantine steps that have historically made up the cross-border payments process, only about $4 worth of spendable value actually arrived.
“Cross-border payments generally are painful for everyone involved,” Brennan told Webster. “I’m Canadian, and I tried to send my brother $100 to contribute to my parents’ anniversary gift. And it turned out to be incredibly difficult just to do that little task.”
It’s a friction-filled process that has less and less reason to exist as the world increasingly goes digital. Brennan said North Lane’s aim is to remove all the pain and hassle for its corporate clients when it comes time to pay out money to workers, consumers or clients.
Whatever the specific use case might be and no matter where payors are in the world, North Lane wants its clients to be able to easily send funds and aims to give payees a full set of options as to where the money should flow.
Ironing Out The Cross-Border Seams
There’s no shortage of complexities in managing the flow of funds across borders.
“There are AML/KYC concerns, there’s the lack of transparency in the process and there’s the fact that the different local banks where payments are received have individual and esoteric processes for accepting those payments that aren’t always straightforward or easy to understand,” Brennan said.
But he said North Lane’s platform is built to seamlessly navigate all of those processes for corporate partners, as well as to inject some much-needed clarity into the process. The goal is to make sure both sides of the transaction know that what’s paid in on one side will be paid out correctly (and as expected) on the other.
“We are offering to bring a known quantity — what goes in and what comes out,” Brennan said. “And timing is also important. [With] many of the currency/country combinations, we can make payments in a few minutes. Some of them take a little longer, but we [inform the client of that upfront] – ‘this’ll be an overnight-payment event’ or ‘expect this payment to arrive in 15 minutes.'”
Everyone with a stake in the payment knows what the amount will be, how long it will take and, most critically, exactly when it will arrive. Brennan said that’s key because it inserts value into the relationship between the payor and the payee.
Although North Lane provides a tool that is necessary to enabling payments for both sides, its part of the transaction “is actually an ancillary engagement to the overall value that the payee is doing with our client,” Brennan explained. “We think we can add value [by] simply making that larger event more valuable for our clients and for the payees or the end users.”
That’s a value Brennan said is increasingly becoming a “need-to-have” instead of the mere “nice-to-have” that it is today.
COVID-19’s Big Push
The payments market’s evolution toward being more virtual, seamless and digital isn’t exactly new. Moves in that direction — both domestically and cross-border — have been ongoing for several years.
But Brennan said there’s been a “hesitation” in that evolution in the form of a lot of “stutter steps” that have tripped up progress. For example, there’s been hesitancy around sharing information or becoming too tied to mobile. None of that was enough to stop progress, but it was surely enough to slow things down.
But then COVID-19 came along, and for all the damage it’s undeniably brought, it’s had the great benefit of ending the debate about digital. Digital is here to stay, and people are only going to get less and less patient in waiting for slow, stodgy systems when it comes to getting paid.
In the era of escalating consumer demand around digitizing payments and smoothing out the seams, there’s no longer much of a question about whether businesses must make international payments more rapidly and efficiently.
“COVID has given us that answer, and I think there is no looking back,” Brennan said. “The answer is that change is here. Someday soon, smooth international payments won’t be a [novel] thing — they will just be. It will be seamless and it will fit into how we lead our day-to-day lives.”
“I think some things will change [after COVID-19],” he added. “I certainly hope the plexiglass barriers in restaurants go away, but I think the ways in which we transact and engage around payments will never go back to what it used to be.”