Happy 144th Birthday Bank-to-Bank Wire Transfer—R.I.P
February 24, 2017
2017 is certain to be an interesting year for small business America. With American trade policy unknowns causing uncertainty over the cost of global exchange, global SMBs will increasingly look for greater efficiency and savings. When it comes to bank-to-bank wire transfer cost and efficiency, there’s some good news and some bad news.
First, the bad news: Thus far, banks have done little to improve the back-end systems and processes of making and receiving global payments. For small business owners especially who typically wear many hats, this presents a significant obstacle. Time spent on back office processing is time taken away from the pursuit of growth, opportunity and innovation. International bank-to-bank transfers remain expensive and slow; they lack transparency and provide little in the way of tracking and reporting. Part of the problem lies in the fact that international bank-to-bank transfers are subject to the regulations of both the sending and receiving country, clogging up the process and slowing down clearing. But the big banks, institutions that they are, have a penchant for familiar delivery options. They still regard wire transfers as commoditized, undifferentiated, volume-driven utility products, doing little to meet the changing expectations of importer exporters.
Now, the good news: Increasingly, SMB financial managers are turning to alternative payment solutions, or “non-banks” for faster, smoother payment processing. Indeed, entire emerging markets like Brazil, India and China, free of legacy technology, are embracing alternative payments, even viewing them as their preferred payment method of choice. Alternative payments are expected to account for 59% of settlement activity by the end of 2017.
Unlike traditional banks, alternative payment solutions don’t treat sending and receiving global payments like the old bank-to-bank wire transfer commodity.
Strategic, value-add payment solutions like Veem are helping global small business owners to:
- Simplify the process of international wire transfers
- Enhance productivity
- Track payments in real time
- Avoid bank-to-bank transfer “death by 1,000 fees”
How are we able to deliver a global payment solution that offers so much more than the old standby bank-to-bank transfer? By leveraging 21st century technology while the banks still use networks designed and engineered in the 1970s.
Learn more about the history of the wire transfer from its first commercial use in 1872 to EFT technology to the cryptocurrencies of today. See how the fundamentals of managing settlement and credit risks remain unchanged for banks operating under outdated technology—and how the technology of the last five years has forever changed the cost and speed of moving money.