I always like to kid around with my younger colleagues that I’m old enough to remember when Silicon Valley was called the Blossom Valley. There are faint memories of when the land of Google and Apple was known as the land of apricots and cherries.
Likewise, it wasn’t all that long ago that participating in global trade was a game for just the mega companies. Headlines were always about Fortune 500 companies expanding into new markets or optimizing their supply chain by setting up an office or vendor in a far-off part of the world.
This global business networking was the driver of both national and global GDP for decades. But something happened in the last 10 years that is now set to drive global growth for the next few decades, according to a Glenbrook Cross-Border Study (Cross Border B2B Market Sizing and Segmentation, September 2014). SMBs (small and medium sized businesses) have quietly become more and more tied to global networks than ever before. It’s a reality that has crept into normalcy for the online sports gear seller, your neighborhood coffee shop and the boutique fashion store you like to frequent. How did this happen?
Like many things of late, it’s been driven by technology. Twenty years ago, if you wanted to find suppliers or workers in another country, you had to know someone there or fly out there yourself. That’s a tall task for the small business owner who already has a hundred jobs to do and expenses to worry over constantly. But in the wired age, many suppliers have set up their own websites to help people understand their offerings, and mega-platforms like Alibaba and Outwork are connecting even small businesses with merchants and contractors around the world.
Communication technology has also made a big leap forward. Many people forget that long distance calls were once a scary expense, and what a headache it was to find someone’s phone number in another country. But with VoIP technology going mainstream, video calls helping people make better connections, and phone numbers and profiles being just a click away, small businesses can now connect around the world in extremely convenient, cheap and efficient ways at any hour.
Despite all of these advances, one area has remained stuck in the technology of yesteryear: supplier payments. The large majority of payments today still are done via bank wires, using technology built in the 1970s. It involves banks talking to banks, which then frequently talk with other banks to complete a cross-border payment, and it makes for a high-touch, high-expense, bad communication experience. Regulatory complexity and the sheer size of banks has made competition light and throttled innovation, leaving banks to charge high fees and FX spreads with a paper-form process that would have been laughed out of existence in most other industries.
That’s now changing. Companies like Align Commerce have “replumbed” the global payments network to make connections more cost-effective and transparent around the world. Align’s leadership team has built global payment services many times over, and they saw the opportunity to “build a better mousetrap” with cutting-edge global communication rails and a user interface that makes payments as easy as a click. With a few basics such as company name and email addresses, SMB owners and employees can avoid a trip to a bank and make and receive payments that they can track on a dashboard like someone tracking a shipment on FedEx or UPS. In short, big supplier payments have finally arrived in the modern age.
Access, communications and payments to vendors around the world are all now easy to do on laptop or phone. SMBs have reached the last frontier in global trade: they now have access to lower costs and better talent around the world, just like the big guys.