In a newly released report, financial technology giant Ripple detailed the inefficiency of the traditional banking system in cross-border payments for SMEs.
Traditional Bank Slow with the SME Cross-border Payments Needs
The report indicated that the B2B cross-border payment and remittance industry for SMEs has seen significant growth in recent years (2016 to date).“SME needs with cross border payments are largely unmet by traditional systems”
Most of the growth and expansion took place in emerging markets.
The report indicated that the SMB B2B cross-border payments market, despite its recent significant growth, is being hampered by the lack of traditional financial services.
International payment fees are very high and in some areas, there is no one offering these services.
Over the past five years, particularly the last few years of the pandemic, many workers have worked from home or have their work outsourced and many people have shopped from online stores, including groceries and other basic necessities that need to be compared to before the pandemic. Fast and secure online payments have become rampant.
SMEs rely on cross-border payments to grow their business and attract new customers.
Another disadvantage of the current cross-border payment system is a large number of intermediaries.
All of these nuances can negatively affect the ability of SMBs to grow their business and easily maintain their business.
Pain points of SMEs listed in the report
• Limited knowledge of total costs and payment time
• The payment cannot be tracked when it actually arrives
• Correspondent bank transfers slow down processing
• Very expensive currency spreads and fees
Cost of B2B payments through traditional systems
• An average of 2-5 days for processing
• 30-100 USD + cost per transaction
• 4-6% international payment error rate
Ripple Announces the Establishment of New ODL Corridors in the UK and Brazil
Ripple reminds us that blockchain technology can solve all of the above problems, especially based on its RippleNet and ODL services.
The company also recalled that two of its customers, InstaReM (headquartered in the UK) and BeeTech (headquartered in Brazil) recently set up a new ODL payment channel for fast and cheap cross-border payments to Portugal, Germany, Spain, France and Italy.
