Published : 4 years ago, on 04/11/2020

By Lee McDarby, Managing Director of U.K. International Payments

The Covid-19 pandemic has impacted businesses of all shapes and sizes across the globe, pushing companies to the extremes of their operations. Many have streamlined their workforce whilst trying to maintain full functionality, and others have had to rapidly expand or ‘pivot’ to meet consumer demand, utilising innovative cross-border payment technologies to do so.

With Covid-19 looking set to stay, companies may consider expanding their customer base, looking to new, high growth emerging markets. At moneycorp Bank we’ve seen the potential of emerging markets. For example, our Brazilian Bank, moneycorp Novo Mundo Corretora de Câmbio, makes us one of the only 5 licensed FX banks worldwide that can service Brazil’s FX market – a market, we can testify is rapidly expanding. Although foreign trade only represents 29% of its GDP (2019),  Brazil is among the world’s 25 largest exporters and importers.

In addition, last August, the UK government launched a £20m programme to bring Brazilian businesses to international markets. The Brazilian government is also keen to strike a Mercosul-United Kingdom trade deal post-Brexit, and alongside the US-Brazil protocol signed in October 2020, these movements signal that globally, market economies are modernising, something which is increasing their trade desirability.

However, there are potential business risks that come with trading in new markets, especially when it comes to increased currency exposure. Emerging markets tend to have particularly volatile currency markets, meaning that executing or receiving payments at the wrong time could significantly impact on a company’s profit margins and revenue.

Looking at currency fluctuations makes this clearer. For example, from July to September 2020, four of the largest emerging markets’ currencies weakened and we witnessed significant sterling strengthening as follows:

• GBP / INR increased by 6.9%
• GBP / BRL increased by 15.6%
• GBP / MXN increased by 10.4%
• GBP / BDT increased by 9%

Nonetheless, expanding business operations into new markets presents fresh opportunities for growth. It’s important to choose a payment partner with the tools and expertise in local markets to mitigate against potential risks. Choosing a partner with the right products and resources will ultimately empower you to focus on expanding your business and help you to thrive in these unparalleled times. But what should you consider?

Firstly, expanding internationally is likely to see your business receiving payments from multiple countries that use an array of currencies. Find a provider that offers a multi-currency IBAN. Most traditional banks or IBAN accounts can either: receive only one currency, convert the incoming currency to your account’s currency instantly on arrival, or provide an account per currency. Whereas a multi-currency IBAN will have the ability to provide a singular receiving account that is able to receive and hold international payments in multiple currencies. At moneycorp Bank, our multicurrency IBAN allows payments from over 70+ countries. This promises to significantly reduce pressure on time and resources, allowing you to expand your operations seamlessly and hassle-free.

Secondly, having access to a seamless Application Programming Interface (API) solution is just as vital for companies expanding abroad. It not only accelerates speed but puts payments into the palm of your hand. An API can take the hassle out of global and bulk payments, such as payrolls, by giving businesses the capability to fully automate their payroll system, automate domestic and international payments to suppliers and easily monitor exchange rates ensuring conversions are made at the opportune moment to maximise value and profitability.

As you expand into new markets, it’s important your API keeps up with your international growth – a solid API is one that is developed to deliver. Alongside utilising Machine to Machine efficiency, which enables the platform to run seamlessly with your internal systems through direct machine communication, we have a dedicated payment solutions team developing alongside businesses to meet their business model needs – creating bespoke solutions that work.

Finally, when you’re expanding internationally the security of your funds and inbound and outbound payments is paramount. Transparency is key, knowing where your funds are being kept and how they’re being used by your banking partner is fundamental to a good partnership. Make sure to bank with a licenced bank, as your business will have access to the highest-grade compliance checks on companies that you’re transacting with, so you don’t fall foul of fraud.

As companies expand, payment processes internally and externally become more arduous, by utilising a multi-currency system that can be customised, the payments process will be streamlined. It affords you the bandwidth to nurture new relationships that could give you access to untapped markets, knowing that your transaction will cross the border, safely and hassle free.

Of course, technology isn’t always the bottom line and the phrase “it was pleasure doing business with you” wasn’t born from API and IBANs. Expert local and sector-specific knowledge is just as important as the speed and simplicity of payments. But it doesn’t have to be a trade-off. Keep the technological priorities, outlined above, front of mind when choosing a payment provider, but look for the team behind the app, to ensure that your profitability is front of their mind, not just their screens.