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What are the challenges of real-time global payments?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedJan 20222 min read

The global payments landscape is large and continues to grow at a rapid rate. While global payments totalled $1.9 trillion in 2018, there are numerous challenges associated with cross-border real-time payments, creating multiple pain-points for customers. We’ve put together a guide to these challenges and explain how GoCardless may be part of the solution.

Benefits of real-time payments on a global scale

Over recent years, the use of mobile technology for making payments has increased rapidly. At the same time, supply chain logistics have also improved, meaning that people are receiving the goods/services they ordered at a much faster pace. As a result, consumers are demanding payment services that offer convenience, speed, security, and value for money.

That’s where real-time payments come in. There are many benefits of real-time payments on an international level, including speed, convenience, and the knowledge that your funds will arrive at their destination exactly when you need them to. However, banks and payment processors are facing multiple challenges when it comes to implementing real-time global commercial payments:

1. Expensive global payment charges

When it comes to the challenges associated with cross-border real-time payments, global payment charges tend to be one of the most common complaints. Many businesses find that international payment fees are simply too high, while foreign exchange rates are also a regular cause for concern. Improving back-end systems and processes is likely to have a significant effect on the high global payment charges that remain a pain-point for many businesses pursuing international growth.

2. Slow processing times

Slow processing times are another common challenge associated with real-time global commercial payments. Real-time doesn’t always mean real-time, and generally speaking, international bank transfers take anywhere from one to five working days to complete. This is because international payments are usually processed through a secure messaging system referred to as the SWIFT network, which moves your payment order through a series of intermediaries before it reaches its destination. Continued infrastructure growth, such as the implementation of TARGET2 for eurozone payments, will contribute to faster payments across the board.

3. Aligning with legacy systems

Although the UK has had a relatively long engagement with real-time payments – dating back to the introduction of the Faster Payments scheme in 2008 – it’s a relatively new innovation for many other countries. Making legacy systems ready for real-time payments is likely to require a serious investment of time, money, and effort, placing a heavy burden on banks and payment processors around the world.

4. Issues with security

Finally, there’s the security element. Where money goes, fraud follows. Banks are struggling to adapt their existing security infrastructure to the short review times that are necessary for real-time payment processing. Consequently, the threat of payment fraud is heightened for cross-border real-time payments. It’s important for banks and other payment processors to improve their security infrastructure to keep their customer’s funds and financial information protected.

GoCardless and real-time global payments

So, what’s the role of GoCardless in the cross-border payments landscape? Put simply, GoCardless offers a network for processing international, recurring payments. If you’re collecting payments from multiple regions outside the US, GoCardless can ensure that you receive your money quickly and reliably. For a little more information about the benefits of real-time payments with GoCardless, take a look at this overview of the amount of time it takes to process a global payment with the platform.

We can help

Expanding internationally? GoCardless have created the first global network for recurring payments. Collect payments in your customers’ currency, and settle in your own, at the real exchange rate. All with just your existing bank account. Learn more about international payments.