Simplifying cross-border payments needs more than just technology

by Akbar Hussain, Co-founder and General Counsel, TerraPay  

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As the pace and scope of cross-border payments continue to accelerate, it’s becoming increasingly clear that the payment industry’s approach to compliance must also evolve—and take centre stage.

Whether it’s family members sending remittances back home or businesses making payments to their supplier network across the globe, cross-border payments have (and will continue to) keep the heart of the global economy pumping. Over the last few years, this ecosystem has been shaken by shifting consumer expectations, large-scale digitisation, emerging technology, global trade expansion, and a dynamic global regulatory landscape. And frankly, the industry has kept pace.

Both new-age and established players have made huge strides, leveraging technology to redefine money movement. From mobile wallet interoperability to the real-time cross-border payments that are fast gaining momentum, we have witnessed large-scale innovations.

Regulatory challenges and frictions

The question then is why, despite such powerful technological feats, are cross-border payments still caught in a web of complexities? Well, partly because technology alone is not enough to solve cross-border payment challenges. At the heart of these complexities is an intricate patchwork of regulations, each pointing in a different direction and moving to contrasting legislative tunes.

The result is often a medley of high costs, delays, and frustrating inefficiencies for cross-border payments. So, while payment industry players continue to operate in an interconnected, global economy, the regulatory environment they must navigate is hyper local. Each of the 195 countries comes with their own payment systems, regulations, and levels of technological maturity. And while that may not be surprising, it does more than just inconvenience payment players.

Regulatory frictions including AML compliance complexities, fragmented regulatory frameworks, restrictive data regulations and inadequate access for non-banking players, all stand in the way of inclusive and efficient cross-border money movement, hindering payment providers and financial institutions to build and innovate at scale.

Cultivating compliance and collaboration

The best way out is through. The industry must address these frictions around cross-border payments by encouraging and investing in a strong culture of compliance with a focus on security, transparency, speed and scalability. This not only includes building compliance capabilities and acquiring appropriate licenses but also understanding that cross-border compliance is an ongoing effort.

It’s a journey, not a destination. It involves implementing robust compliance programs, conducting regular risk assessments and due diligence, and most importantly, adapting to the evolving regulatory environment regularly. At TerraPay, we now have 30 global licenses and regulatory approvals. While each of these licensing frameworks is different from the other, they allow us to make money move faster while also ensuring compliance with regional and global regulations.

To that end, we must establish healthy dialogue and collaborative policy-making frameworks by leveraging the diverse expertise of regulators and policymakers, industry experts, and payment providers. Championing such collaboration will help build comprehensive strategies to tackle real-world challenges and pave the way for a future where cross-border payments are both efficient and inclusive.

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