Opportunities in International Remittances
The number of international transaction flows and remittances are increasing as global trade continues to grow. The Payment Service Provider (PSP) market executes higher volumes of cross-border payments, and also faces challenges along the way.
The traditional PSP model faces challenges
To facilitate cross-border payments on behalf of any individual, a PSP requires a bank account at a regulated financial institution. Without that bank account, payments cannot be made. However, many banks have 'de-risked' activity with the PSP sector over the last few years; bank accounts are in short supply and business has become prohibitively expensive.
De-risking by banks occurred at a time of high-profile penalties and investigations into their own USD payments compliance. Recent events and current market conditions have prompted forward-thinking organisations such as BFC Bank to reenergise its PSP strategies.
What has BFC Bank done?
BFC Bank has a long history of providing best-of-breed foreign exchange (FX) and foreign remittance services to its clients. BFC Bank has focused remittance services designed specifically for PSPs.
Any PSP that wants to provide money transfer services on behalf of its clients can either attain direct access through a payment scheme or choose indirect access via a sponsorship arrangement.
Banks that wish to provide a full suite of services to clients are required to sign up to all of the major UK payment networks (BACS, CHAPS, Faster Payments, Link) and credit card schemes, or use agency services through one of the 'big four'. This is not a straightforward process and presents a significant challenge.
BFC Bank has direct access to Faster Payments. As a regulated bank, BFC Bank is not dependent on any correspondent bank relationships to facilitate money transfers. Settlement of payments is conditional on organisations having a reserve account with the Bank of England (BOE), which BFC Bank has. Non-bank PSPs can now enjoy a sponsored arrangement with Faster Payments that leverages BFC Bank's direct membership.
Protection and compliance
Robust compliance and client due diligence are critical for any organisation in the regulatory intensive payments industry. BFC Bank conducts thorough know-your-customer (KYC) checks to verify that anti-money laundering (AML) standards are in place, to protect clientsâ€™ customers and to ensure best practice. BFC Bank only works with PSPs that meet stringent compliance criteria; the bank works constructively with PSPs to help develop business models and protocols.
and do you know the associated costs?
An international payment is the transfer to or receipt from a foreign country by an individual or business. An SME may have international customers or suppliers and send or receive payments abroad. Traditionally international payments incur fees and FX charges. Transaction charges are not always made clear and can significantly reduce revenues over time. Read more>>
Multi-currency accounts with cross currency pooling provide an efficient and cost-effective method of cash management across multiple currencies. Customers are able to pool their balances across multiple currencies up to a pre-agreed limit. Read more >>Read more >>