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Costly And Slow Cross-Border Payments Are Crushing SMBs And eCommerce Growth

Freshly armed with $10 million in Series A funding, Hong Kong-based Currenxie is on a mission to provide businesses with a hassle-free cross-border payments experience, no matter where they’re based or what currencies they do business in.

Currenxie Founder and CEO Riccardo Capelvenere told PYMNTS in an interview the cross-border payments niche is an area that’s still underserved, especially for small to medium-sized businesses (SMBs) and startups.

“Access to payments is acutely felt by small businesses, and that can really delay their ability to operate,” Capelvenere said.

Read More: Hong Kong’s Currenxie Begins $10M Series A

The CEO told PYMNTS the majority of pain points in cross-border transactions relate to speed and costs and that both throw up major obstacles for startups as they’re struggling to get off the ground.

“Issues with speed start with access,” Capelvenere said. “In many countries and for many businesses, simply accessing cross-border payments is a hurdle. In Hong Kong, our home market, opening a corporate bank account takes months with requirements that are difficult for new or small businesses to meet.”

The Friction Continues

Even after a business gets that account, he said that slow transactions are still a major burden, with waiting times of two to three days or more, which cause major headaches for businesses that need faster cash flow, Capelvenere said.

“With time and patience, most businesses will overcome this hurdle eventually and build processes around it, but all will still bear the associated costs unless they adopt a FinTech solution,” he added.

The costs can be high, especially for a startup that’s operating on low profit margins. With fees ranging from $20 to $50 for a typical SWIFT payment, they can be extremely unpalatable for companies transacting in small amounts.

“Foreign exchange [FX] is a headache too,” Capelvenere continued. “Are you getting a midmarket rate with a transparent and competitive fee shown alongside, or [are you getting] a high hidden cost through a markup in the FX rate? If your provider isn’t upfront about all of their FX fees, you’ll spend time calculating what you’re really paying.”

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A Slicker Solution

Currenxie is aiming to solve these challenges with a system of virtual accounts for its customers. It enables businesses to create a unique virtual account in any country via one of its partner banks. Then, when the customer receives a payment, those funds may be accessed immediately through a global account that consolidates all incomings and outgoings.

Capelvenere said Currenxie pursued this approach because it’s not enough to simply build unique payment rails to solve the challenges he described. He said while new payment technologies such as blockchain-based infrastructure are all very efficient and exciting prospects, what’s holding them back is they require everyone to sign up to them to make any kind of difference.

“Their application forces people and companies to enter that specific ecosystem, which creates another major hurdle,” he said. “So they require mass adoption to be relevant in the business payments space.”

“It’s not enough to offer payment rails. You need multicurrency accounts and foreign exchange too,” he explained.

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Capelvenere told PYMNTS Currenxie provides customers with the benefits of these new payment technologies while allowing them to operate within the global banking network that already has worldwide adoption.

“This area is evolving fast,” he continued. “In fact, it’s faster than most users can take the time to keep pace with.”

With Currenxie, customers don’t need to keep up with the pace of innovation in payments tech because the company does that for them. “We stay close to our clients, we listen to them, we build for them. We keep one eye on the future, but we ensure we create solutions that are relevant for today.”

Capelvenere says that’s absolutely necessary because cross-border payments are going to explode in the coming years as the world becomes more global. Customers will be far too busy running their businesses to do anything else. Hence the need for seamless payments.

“eCommerce will become one of the biggest drivers of this growth,” he said. “It’s highly dependent on cross-border transactions and also very welcoming to startups and small and medium enterprises that tend to drive growth.”

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