Small- to medium-sized enterprises (SMEs) make up the backbone of both dominant and emerging economies today. Yet they are the ones who are most impacted by inefficiencies in cross-border payments system — especially in the context of growing global e-commerce.
To compete, SMEs need to be able to focus on their business, not on whether their supplier receives a payment. Traditional global payments systems involve a lot of intermediaries — not only does this slows down payments, it also introduces more margin for error. According to a recent McKinsey study, 60% of business to business cross-border payments require a manual intervention that takes 20 minutes or more.
The distinct challenges in cross-border payments that SMEs face set the tone for the conversation between Joy Macknight, Deputy Editor of The Banker, Colin O’Flaherty, American Express’s VP & General Manager of global commercial services UK & Russia, and Marcus Treacher, Ripple’s SVP of customer success, on the final day of Money20/20 Europe.
SMEs need to be able to move small amounts of money at high speed, with certainty. Yet they themselves don’t believe this is happening. According to O’Flaherty, 71% of SMEs believe cross-border payments are problematic.
“Ripple offers instantaneous, point-to-point conversations between the sender and receiver of funds,” O’Flaherty said. “And that provides a real opportunity to alleviate most of the issues our customers are facing.”
American Express distinctly understands the issues that SMEs face with traditional banking, from cross-border payments to access to credit. The company’s “Open Forum” is a highly regarded and popular platform for resources and support to help small-to-medium businesses grow.
Together with Ripple the companies are working to address the problems their customers face with cross-border payments. Ripple’s xCurrent provides a new blockchain based infrastructure for global payments. American Express customers are connecting to this infrastructure in a way that is designed for maximum impact and the best possible user experience.
“The consumption of Ripple technology is not a heavy lift for SMEs,” Treacher explained. “This is because we’re implementing within the existing payment networks and banking world.”
With Ripple-powered blockchain helping facilitate transactions behind the scenes, American Express customers in the U.S. are already seeing quicker payments, and O’Flaherty said the business has seen a decline in customer queries about the status of payments.
But it’s not about just a technological interface, O’Flaherty stressed. Ripple and American Express have also aligned from a fraud perspective — risk, user experience and customer service. This has allowed for a “holistic experience” that’s ultimately benefited the customer.
As the conversation came to a close, O’Flaherty affirmed that American Express’s intention is to expand based on successes to date — to focus on making Ripple-enabled services available across new global corridors with the large transaction flows.
“We’re still in the early stages, learning a lot,” said O’Flaherty. “And blockchain offers a big opportunity to solve real customer needs.”
To learn more about how Ripple solutions can improve your customers’ payments experience visit our solutions page.