As commerce becomes increasingly global and digital, companies of all sizes are seeking to expand their business with cross-border (XB) payments. While this move presents great opportunities, it also entails numerous complex challenges, leaving many unsure of where to start. Visa offers decades of experience and its robust Visa Direct network to help you build secure cross-border¹ money movement solutions. If your business is considering this leap, here’s some essential questions to answer before you start developing cross-border money movement solutions— from the fundamentals to the finishing touches.
Question 1: “What XB solution am I offering and for whom?”
Knowing the use-case and locations of your cross-border transfers as well as your intended customers will impact the systems, connections, and regulations you’ll need to consider. There are two major types of XB payments – consumer money movement, where people move money between their own accounts (Account-to-Account or A2A) or to others’ (Person-to-Person or P2P), and business transfers, where businesses move money to other businesses (B2B) or disburse money to individuals (B2C) such as customers or employees. The differences between the two should not be underestimated, each comes with varying client and regulatory requirements and expectations.
Where you intend to offer XB payments in terms of origination and destination markets is equally important to iron out. Will you be supporting A2A payments for U.S. workers moving money back home to the Philippines for personal investment? Will you offer payouts to material suppliers in Latin America? Each of these examples will come with their own requirements, watchouts, and challenges. Some clients may need to reach very specific digital wallets in destination countries, some may just want to deliver to bank accounts, others might have need to utilize real-time FX rates. The more detailed your use cases and the more specific you can be about the needs of your clients, the better you can determine the capabilities you already have in place and what you’ll need to build upon.²
Finding the right partner to help can save time and money while making your expansion plans more manageable. Visa Direct and its global network of enabling partners help clients transfer money to billions of endpoints worldwide daily.
Question 2: “What capabilities do I have, what do I need to develop, and can and will I do it all myself?”
It’s possible you have the experience and systems in place to successfully launch a XB payment solution, but for many players out there it’s simply not the case.
When it comes to expanding your money movement capabilities, there’s no shortage of legal and regulatory steps, boxes to check, and problems to solve. The first of many being your money transfer license. If you are already licensed for domestic money transfers you could apply to regulatory authorities to extend your license to cross-border money transfers. Alternatively, in markets where applying for licenses is a lengthy and expensive process you may want to seek a licensed sponsor, this is the choice many Fintechs adopt. For example, in the U.S., a money transfer license is typically required to conduct cross-border transfers from each of 49 U.S. states (Montana being the exception), so Fintechs often seek a sponsor such as an established bank.
Dealing in cross-border money movement means dealing in multiple currencies, and those funds need to be sourced, handled and stored securely. Dealing exclusively in major, highly traded global currencies like U.S. dollars or euros is more straightforward and individually accessible to smaller players. But if your goal is to expand to a broader range of markets and exotic currencies or infrequently traded currency pairs, you’ll need a partner that can do more. Beyond transaction currencies, you also need a plan for which currencies you’ll settle in. Visa Direct enables money movement to 190+ countries and territories and supports transactions in 160 currencies and settlement in dozens of currencies.
A partner like Visa Direct can help guide you through this planning process, and also provide some clarity on which of your planned currencies you can and can’t settle in.
Question 3: “What international legal obligations and security standards do I need to meet?”
Whether you already have proper legal counsel in place or need to find one, tackling your compliance stage should begin by conducting legal and risk reviews to provide opinions on applicable regulations and compliance standards. The extent of your legal reviews will depend on what countries you want to expand into, but will include compliance requirements like sanctions screening, anti-money laundering (AML), anti-terrorist financing, and consumer protection protocols.
Different countries and their governments have their own sets of laws, standards, and regulations when it comes to participating in their financial markets, which are not fixed and continue to evolve. Data capture and storage means understanding and complying with data and privacy laws in different countries. For example, the European Union has robust data privacy regulations³ to protect its consumers that you will need to take into account in your data storage and protection strategy. You’ll also need to adhere to AML and anti-terrorist financing regulations which vary by country. Money transfer originators moving into cross-border payments for the first time will need to strengthen risk controls to ensure that they are not handling payments to or from sanctioned individuals or entities (sanctions screening), and to prevent international money laundering (suspicious activity monitoring). It’s also important to make sure that transactions contain all the data required by regulations in your destination markets so that receiving institutions can also apply the right risk controls and meet their reporting requirements.
Fraud and risk management is another crucial aspect of your compliance responsibilities. More and more regulations are coming out to protect people and organizations from the risk of fraud on payouts such as scam fraud (when someone is tricked into authorizing a payout) and account takeover (when a fraudster takes over an account or wallet and drains the victim’s funds through payout to themselves), and these standards can vary depending on your operating countries.
Consumer protection is another area of the law that cross-border originators need to be mindful of. Many countries have laws that protect consumers from being misled about how much money the final recipient will get and how fast they will get it. While Visa takes steps to ensure transparency in factors that affect payout transparency such as currency conversion, fees and speed, you should seek out advice on how to correctly represent your service standards to consumers.⁴
Be advised that this is an ongoing process as laws, sanctions, regulations and fraud/risk management are complicated and constantly changing. This step is often where organizations — even major financial institutions — can get in (expensive) trouble by not staying constantly dialed in. Which is why your next step should be to source a permanent team to watch for any new compliance and risk management developments. Identify roles like Chief Compliance Officers or Chief Security Officer and respective supervisees. If these are new roles for your company, decide whether this will be internal or external hires. If said roles are already established in your organization, be sure they have the capacity to take on cross-border responsibilities. This step is of the utmost importance, as the responsibility of compliance and risk protection falls on your company — regardless of whether you’ve partnered with someone externally for any part of this process.
Question 4: “How will I spread the word?”
At the final stages of your cross-border expansion, you’ll want to be sure your target users are aware of your new services. This is when you’ll decide how you’ll launch and market your new cross-border offerings. Your go-to-market solution will differ significantly depending on whether you are servicing B2B or consumer money movement. Some specifics to consider include creating educational materials, FAQ and providing more transparency such as real-time status updates and privacy disclosures throughout your user experience.
When it comes to finishing touches, designing your user experience is much more than a pretty face. Before you start, consider whether it’ll be embedded within an app or freestanding, and decide if you’ll provide flexible payout options to cards, accounts or wallets. Much like your marketing, B2B vs B2C servicing will all have different priorities when it comes to designing your UX. You might even find certain countries and markets have different standards, preferences, and habits that influence how you build out your app and which languages you need to serve.
Utilizing Visa Direct as Your Partner
While getting started on cross-border money movement has a myriad of complex challenges, your business doesn’t have to do it all alone. Visa Direct and its robust ecosystem of VisaNet members, regulated entities and specialized partners helps businesses move money across borders (190+ countries and territories), currencies (160), and end points (8.5 billion) – quickly and securely. Along with decades of experience to help guide and support you, Visa Direct is pioneering secure money movement solutions to help you augment your current capabilities and get to market faster.
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- Availability varies by market. Please refer to your Visa representative for more information on availability.
- Use cases are for illustrative purposes only. Program providers are responsible for their programs and compliance with any applicable laws and regulations.
- General Data Protection Regulation (GDPR).
- Visa Direct clients and participants should always consult and seek approval from their internal compliance teams on sanctions screening controls and processes and are solely responsible for their own compliance with applicable laws and regulations. Optional compliance controls and risk management tools and services are provided solely for the convenience of the Visa Direct clients and participants, and Visa makes no warranties with respect to them or their results.
- Actual funds availability depends on receiving financial institution and region.