San Francisco, United States
A new white paper titled, "The inefficiencies of cross-border payments: How current forces are shaping the future," provides a comprehensive overview of the cross-border payments infrastructure and identifies five key payment trends that impact cross-border payments.
The cross-border payments process is undergoing a period of profound change, according to the paper. The five key trends that are impacting cross-border payments are:
1. The emergence of transnational systems for the settlement of local payments in foreign currency is standardizing formats and driving the implementation of straight through processing standards for transfers between banks as well as between banks and customers.
2. Regulatory requirements and government mandates are influencing how payments are made and what fees can be charged.
3. Payment systems are becoming more efficient at managing credit and liquidity risks.
4. Bank and business consolidations have been the single biggest force reshaping the global payments landscape over the past two decades. Acting as a transnational system, large banks operate their own internal global payments networks, through which they can route payments to destinations in different countries. Such internal networks do not necessarily differentiate between domestic and cross-border payments, eliminating the need to treat a payment as cross-border, which can lower costs and increase competitiveness.
5. The search for operational efficiency has led to the outsourcing of payment and securities clearing to a third party, which may be a bank or non-bank service entity. Concern exists about the regulatory absence in this area as service firms, unlike banks, are not regulated or supervised by government agencies.
"The increase in global trade and improvements in physical supply chain efficiencies are creating demand to improve the cross-border payment process, which is currently inefficient and costly for banks and businesses," said Aliza Knox, senior vice president, Visa Commercial, Visa International. "Improvement in the efficiency and effectiveness of cross-border payments is likely, but will require all stakeholders to increase their investments in order to change the processes and systems for businesses, banks and payment systems."
In 2004, according to analyst estimates, cross-border payments represented approximately eight percent of the total volume of commercial payments. Analysts estimate that the volume of cross-border payments will increase at a compound annual rate of 10.2 percent globally during the period 2000 through 2010.
"It's challenging to size the cross-border payments market because there is a blurred line of demarcation by large global financial institutions between domestic and international payments, many of which may be part of multiple transactions that include both," said Dr. Yoon S. Park, PHD & DBA, George Washington University, author of the cross-border payments white paper. "Recognizing that the world trade volume has roughly doubled during the past 10 years, we can estimate that cross-border payments as they relate to international trade have also doubled in size."
Research Methodology for Study
To analyze the relevant issues faced by banks and corporate clients, Visa commissioned Dr. Park, an expert on international banking and global finance markets, to conduct 15 field interviews with bank and corporate key officials from around the world. The field interviews were complemented by an extensive literature study, resulting in 56 bibliography references, to provide insight into the challenges and opportunities for developing efficient cross-border payment systems.
To view the entire cross-border payment study, visit http://www.visa.com/crossborder.
Notes to Editors:
About Dr. Yoon S. Park, author of the cross-border payments study: Dr. Park, an expert on international banking and global financial markets, is currently Professor of International Banking and Finance at that School of Business and Public Management of George Washington University in Washington, D.C., where he has been teaching for the past 22 years. Among his many publications are Project Financing and International Financial Markets, and four other books as well as many articles and reports in the fields of international banking and finance. In addition to his distinguished academic career, Dr. Park has also been a consultant to the World Bank, Asian Development Bank, International Finance Corporation, Inter-American Development Bank, US Agency for International Development, US Federal Reserve, Overseas Private Investment Corporation, US Export-Import Bank, Foreign Service Institute of the US State Department, and other private and public institutions around the world.
About Visa Commercial: Visa Commercial payment solutions -- Visa Business, Visa Corporate, Visa Purchasing, and Visa Commerce -- combine payment with information to create intelligent payment solutions that enable business and government organizations of any size and type to reduce costs, streamline operational and payment processes, and make more informed business decisions. Backed by Visa's unsurpassed acceptance and utility, Visa Commercial products and services provide the most complete way to manage payment-related processes, including travel and entertainment and procurement expenditures, payroll distribution, and information management. For more information, visit www.visa.com/visacommercial.
About Visa: Visa connects cardholders, merchants and financial institutions through the world's largest electronic payments network. Visa products allow buyers and sellers to conduct commerce with ease and confidence in both the physical and virtual worlds. Visa is committed to the sustained growth of electronic payment systems to support the needs of all stakeholders and to drive economic growth. Visa products currently generate more than $4 trillion in sales volume worldwide. Visa has unsurpassed acceptance at more than 24 million locations worldwide including one million ATMs. For more information, visit www.corporate.visa.com.
CONTACT: Visa International Sabine Middlemass +1 650-432-8307 globalmedia@visa.com or Burson-Marsteller Carolyn Krytzer +1 415-591-4022 carolyn.krytzer@bm.com
Source: Business Wire (Business Wire India)