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Meet today's "digital first" money movement demands with innovative FX solutions

By Richard Meszaros, MBA, Vice President, Head of Cross Border Money Movement, NA Visa Direct, 06/20/2023

Consumers and businesses want their money to move from one endpoint to another just as quickly as an email zips through cyberspace. But it’s not always so simple when it comes to navigating cross-border payments. At the core, cross-border money movement is challenging because it involves foreign exchange (FX), and that impacts the cost of doing business with customers and suppliers across borders. Fluctuating FX rates mean the sender may not know the FX rate that will be applied impacting the true cost of the payment. It’s like making a purchase without knowing the price–which brings a lot of uncertainty and the final amount received in the local currency may not cover the payment obligation.

Globalization brings many potential benefits to businesses–including growing their customer base, but it comes with the friction and the costs of supporting cross-border FX payments. When conducting cross-border business, it’s critical to be equipped to pay and be paid in a range of foreign currencies based on your customer’s or supplier’s location. As the largest financial market in the world, the global foreign exchange market size is expected to increase from $715 billion in 2022 to $763.1 billion in 2023.¹ With the massive scale of this market, every basis point matters. For example, when a business pays a supplier in another country with a different currency, they need to know what FX rate will be applied to the payment, as well as any additional banking fees charged to process the payment. Lacking transparency as to the FX rate that will be applied to the payment can often result in over or underpaying the supplier resulting in friction in cross-border payments. FX risks need to be managed and lowering the cost of supporting cross-border payments where possible can have a positive impact on overall company profitability.

Gig workers, marketplace sellers, and content creators can also face challenges when it comes to global transactions where the FX issue comes into play. Due to the lack of the transparency of the FX rates, they may not know exactly how much of their requested payment they’ll receive until the payout lands in their account.

Deliver on today’s expectations for global money movement with Visa Direct

Visa Direct is a partner in helping financial institutions and payment originators deliver better cross-border² money movement and FX payment experiences to their customers who expect to send and receive global payments without waiting for days. Our network streamlines an often cumbersome process, while providing transparency on money delivery timelines and fees.

Utilizing Visa’s global network for FX payments, Visa Direct connects financial institutions, merchants, and other payment originators with eligible card, account and wallet³ touchpoints around the world, in over 190+ markets. We provide a flexible and fully-integrated FX solution for 160+ currencies including major, minor and exotic currencies on the Visa Direct platform with card settlement in 27 currencies, and prefunding for account and wallets³ in 10 and 11 currencies, respectively.

We have the ability to generate FX rates using several established market indicators including: leading market data providers, direct access to FX market maker pricing and liquidity, and central bank pricing indicators. Costs associated with managing FX risk, market volatility, and settlement of FX transactions are built into the FX rate provided by Visa. Visa produces a fixed rate held for approximately 24 hours which gives our clients the ability to review fixed FX rates upfront and perform commercial and/or processing activities before committing to the FX rate by booking an FX deal.

“By working with Visa Direct, the infrastructure is already in place to help us provide transparent FX rates that can be locked for a 24-hour period so that you know for certain how much the payer is going to pay and the receiver is going to get for that 24-hour window.”

Marwan Forzley, CEO of Veem

As one of the largest global payments networks, partnering with us gives financial institutions access to our network of 80 million merchants⁴ and 14,800 financial institutions⁵–bringing solutions beyond our own network. We continually enhance our FX capabilities. For example, with the acquisition of Currencycloud, our clients can collect, convert, pay and manage multiple currencies simultaneously, anywhere in the world to expand into more corridors and enable new use cases and payment flows.

The flexibility, security, convenience, and reach of Visa Direct’s global network can help banks, neobanks, fintechs, remitters, merchants, and other payment solution providers support and expand their cross border payment programs. A critical component of these cross-border payments is an FX capability that can deliver on today’s “digital first” expectations for money movement across 190+ markets and 160+ currencies.

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