How Borderless Payments Can Change European Business Forever The rise of fintechs and their innovative solutions for borderless payments could soon revolutionise the way European businesses operate.
By Dmytro Spilka Edited by Jason Fell
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The Covid-19 pandemic has had a profound effect on how businesses conduct themselves in increasingly digital ecosystems — particularly when it comes to leveraging transactions across the many borders throughout Europe. However, the development of fintechs and their innovative solutions for borderless payments could soon change the way European businesses operate forever.
From a significant increase in e-commerce transactions, to the continued growth of mobile banking, the Covid-19 pandemic has sparked widespread disruption in a number of business sectors. For instance, retailers have shifted toward e-commerce models to help safeguard their revenues, while banks have accelerated their digital services to support online banking.
Cross-border payments are rising at a significant rate around the world — not least in Europe as this form of transaction appears set to grow from 5 percent to 7 percent from 2012 to 2022, a rate surpassed only by Asia.
Only by understanding these fundamental changes can businesses look to deliver more innovative financial services in a more digital landscape. The impact of the Covid-19 pandemic has created an unprecedented necessity for both borderless payments and digital platforms like mobile FX and multi-currency wallets as a means of making densely populated, multinational continents like Europe seem more local in a financial sense.
Fortunately, fintechs are helping to deliver a new standard in overseas payments with a level of adaptability that's befitting of these new necessities. Let's take a deeper look at how financial tech is set to change European business forever:
Riding the wave of innovation.
Covid may have caused significant disruption across Europe, but it's not the only challenge that's faced the continent in recent years. The necessity of borderless payments has been central to the ongoing preparations for Brexit, and the UK's departure from the European Union. This led to widespread calls for innovative solutions to mitigate the impact of the disruption the move was set to cause.
Fintechs have been hailed as the solution to Europe's international business problems long before the emergence of the pandemic. New technology-driven financial services firms bring healthy competition by offering hybrid payment solutions on a corporate level, which helps to accelerate the emergence of tech that can create fresh and cost-effective solutions when it comes to digital transformation.
Although Eurozone nations have advantageous payment arrangements in place, for the 17 European nations that aren't in the EU, the friction generated when dealing with their neighbours can be harsh at a time when many industries are having to tighten purse strings in the wake of the health crisis.
We've already seen fintechs arrive with the firm intention of removing the barriers to international transactions across Europe. SWIFT introduced a paper in 2018 that was solely focused on the European payments landscape. The paper looks to the drivers for change across the European payments sector, whilst outlining the challenges and opportunities for its incumbents. The paper highlights that:
Digitisation is driving expectations for fast, frictionless and borderless payments embedded in transaction chains and ecosystems at both retail and corporate levels.
The opportunities offered by technology enables competitors to continually challenge incumbent providers and existing business models to continually innovate and improve.
Regulators are intervening to foster competition whilst protecting consumer rights and promoting payment efficiency and innovation - such as requiring banks to open customer data to third party providers for account information and payment services.
Finance has changed a lot since SWIFT's 2018 paper, but the necessity for faster and more efficient borderless payments has become more important than ever for a post-Covid and post-Brexit European business landscape.
Thankfully, the fintechs that support international payments have also changed in the years since 2018 for the better. Wise, a UK fintech that recently debuted on the London Stock Exchange, is pioneering its FCA-regulated multi-currency wallet — a service that's already attracted 10 million users. The company bills its service as a "7-times cheaper multi-currency account for international people.'
Likewise, emerging fintechs like Connectum are also exploring innovations in the field of 3D-secure, one-click borderless transactions. The company offers multi-currency processing and integration for a wide range of content management systems — showing that startups are becoming considerably more resourceful as they take on their more established counterparts in delivering frictionless transactions.
The case for cryptocurrency.
The future of European business may actually not involve traditional finance at all, but instead, rely on cryptocurrency transactions recorded on immutable blockchains.
By trading in cryptocurrencies rather than fiat currencies, border fees are eliminated due to the decentralised nature of the coins, while the distributed nature of blockchain technology means that it's profoundly difficult for fraudulent activity to take place and modify the records generated surrounding payments and transactions.
Fintechs like BitPay have already worked to accommodate cryptocurrency transactions in more widespread circumstances. The world's largest provider of Bitcoin and crypto payment services recently announced the rollout of Dogecoin payments for merchants and consumers in the U.S. A sports team for example, the Dallas Mavericks, were quick to snap up the platform to allow fans to purchase tickets to games and merchandise in Dogecoin as well as BTC.
Stephen Pair, the CEO of the platform said that "BitPay believes that with continued cryptocurrency adoption, the industry is reaching an inflection point that will forever change consumer confidence, trust and pave the way for blockchain payments to disrupt the way consumers and businesses receive and spend funds."
As European businesses continue to look to digital transformation in order to thrive in a post-pandemic and Brexit impacted landscape, emerging fintechs are likely to offer solutions to the issue of friction between borders where there seemed to be little that could be done to prevent fees and slower service just a matter of a few years ago.
Whether the future of borderless payments across the continent is cryptocurrency-based or more traditional, it's certain that the fintechs that are emerging today will play an imperative role in changing European business for the better.
