Faster Payments Fuel Secure Cross-Border Trade and Quicker Refunds

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Merchants selling to customers across time zones are no longer willing to wait days for their money. As Ed Dean, vice president of product at Nuvei, put it, “In payments, we’ve grown up in a batch-based system, and it’s worked, but as technology advances, we can do better.”

For merchants large and small, that “better” means real time settlement — funds that can move any day of the week, at any hour, and be put to work immediately.

“Batch-based systems are legacy, and at the end of the day, it’s slowing down funds,” Dean said. “Usually you don’t see the systems funding over weekends. That limits merchants’ access to their funds to a five-day window. In general, this reduces their working capital.”

Cash Flow Pain Across the Spectrum

Dean stressed that the challenge is universal. “The pain of access to funds is pain for any merchant, large or small,” he said. Larger firms need rapid access to invest and manage operations across multiple geographies. “Small merchants … are really looking for more localized impact of getting to their funds to pay invoices [and] payroll,” he added.

Delays can mean deferring vendor payments or juggling payroll — serious constraints for businesses trying to grow globally.

 

Traditional batch-based processing, in which transactions are settled once per day and not on weekends, compounds the problem. Dean noted that if a merchant processes 500 transactions in a day, “I get them right away in my bank, I have 500 line items and that can be a little bit overwhelming.”

The solution, Dean said, is a hybrid approach. “What we’re gravitating to is that happy medium where maybe I don’t get all my transactions instantly, but I get my batch instantly,” he said. That way, merchants can reconcile and deploy funds several times a day without sifting through hundreds of individual transactions.

Bridging the Gap

Moving from a decades-old infrastructure to true real-time settlement is not as simple as flipping a switch. “Change is always a little bit scary, especially in a mature market,” Dean said. “Our ACH system is a Monday through Friday, no-holiday kind of concept … we see RTP helping bridge that. Our card brands are six days a week if we’re lucky. So infrastructure wise, we need to start investing in that.”

Nuvei’s role is to help merchants evolve without disruption. “It is the tech companies like ourselves and others that are bridging that gap between a legacy system and our ability to provide faster funds to the new rails,” Dean said. Nuvei already moves funds in a batched real-time fashion, giving merchants “the ability for the reporting to actually know that you have those funds.”

The benefits go beyond merchants’ balance sheets. “If I know I’m doing business with this particular merchant and I can get my refunds quickly … then as a consumer I have confidence in that business,” Dean said. Faster settlement builds loyalty because both merchant and consumer can “reconcile that there’s no disputes quicker … tighter relationship with more confidence.”

Early Use Cases and the Road Ahead

Some sectors, such as the gig economy, online gaming and on-demand payroll, already showcase the advantages. “If I can get my funds sooner, I can disburse them sooner,” Dean said.

Cross-border commerce stands to gain as well. “It’s a waterfall effect,” Dean said, noting that faster payments provide richer know-your-customer data, which satisfies regulatory concerns internationally. “Faster payments are actually breaking down some of the concerns that we have seen historically through cross-border [commerce] … when we have good secure data, which we have through faster payments, I think over time we’re going to see faster cross-border movements.”

Dean likened the shift to upgrading a ship’s propulsion. “The movement of money really comes down to the clearing and settlement, moving from point A to point B … faster payments makes us go faster or quicker just like an engine would,” he said.

For merchants navigating a global economy, that engine of real-time settlement could be the difference between throttling growth and hitting full speed ahead.

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