Worldwide spending on IT services is expected to reach $1.5 trillion in 2024. With talent growing increasingly scarce, companies are looking to expand overseas to tap into a global workforce. But for most businesses that engage in cross-border payments, managing payroll and vendor payments across a worldwide network means relying on slow, expensive, opaque transactions from a legacy payment system.
A new guide published by Ripple, Accelerating Global Payments for Your IT Services Business, explores how international IT service providers can use blockchain-based payments to overcome these challenges and even turn a burdensome operational function into a competitive advantage. The guide details key benefits of blockchain-powered payments, and breaks down how Ripple Payments — an enterprise payment solution — can bridge two currencies in three seconds with one fixed FX rate.
Outmoded Global Payment System
The challenges of cross-border payments are well documented. Global businesses that rely on a diminishing network of correspondent banks must wait days for money to arrive at its destination, often incurring additional transaction fees or news that the payment has failed.
Legacy institutions take an average of 2-5 days for final settlement, charge up to $100 per transaction, and experience error rates of between 4-6%. To add insult to injury, businesses have no visibility into the status of a payment and must tie up critical capital in pre-funded accounts on either side of the transaction to facilitate liquidity.
For those companies expanding their global networks into complex payments corridors like India, Brazil and Mexico, these challenges are even greater. It can literally be faster, cheaper and more transparent to send someone with a suitcase full of money from one country to another. Still, with the $1.5 trillion revenue opportunity, providers continue to expand and accept this antiquated system as the status quo.
The new guide outlines three specific scenarios in which IT Service providers can realize tangible business benefits of blockchain-enabled payments.
- Streamline Vendor Payments
According to Yogesh Sangle, Head of Instarem, managing a global business across 40 different geographies comes with the expectation that you can do business 24/7 regardless of time zones, holidays, or bank cutoff hours. Ripple Payments does just that, offering businesses reliable, affordable, real time cross border payments powered by blockchain technology. IT service providers using Ripple Payments gain the flexibility to pay vendors, suppliers, or employees in real-time all around the world. And because Ripple Payments doesn’t require pre-funding, IT service providers are able to invest previously trapped capital into other areas of the business.
- Settle Payments Instantly
Any business that has sent money across borders is well-acquainted with the achingly slow, days-long timeline associated with traditional payment networks. And with a roughly 25% decline in global correspondent banking relationships between 2011 and 2020, payment chains have grown even longer, making transactions slower and costlier than ever as business capital flows through multiple banks. Ripple Payments turns this dynamic on its head, affording businesses faster payments with transactions that settle in 3-5 seconds, enabling companies to respond to urgent requests, earn potential discounts from vendors or suppliers and reconcile payments more quickly.
- Improve Transparency and Reduce Costs
Most businesses today use highly manual processes to manage their cross-border payments systems. The complex nature of foreign currency transactions coupled with extended cash flows make this challenging and can result in poor data quality and security. This, in turn, increases overhead, produces an inferior customer experience, and can lead to failed payments that increase costs. Ripple Payments delivers radical transparency for every cross border transaction. With up-front pricing and FX quotes, 360-degree visibility throughout a payment and detailed payment data for reconciliation, companies can use Ripple to improve their partner and customer experience while gaining a significant competitive advantage.
Ultimately, IT services companies that recognize the critical role cross-border transactions play in growing their business can use Ripple Payments to leapfrog the limitations of outmoded legacy payments providers. With Ripple, these businesses are better able to diversify their supply chain, offer payouts in local currencies, tap into a global workforce, bring on customers in new markets, access a greater number of software and licenses, and better compete with other providers.
And Ripple makes it easy for non-blockchain native businesses. Companies can integrate Ripple Payments seamlessly into their current payment infrastructure using just one simple API to enhance their payments options, streamline operations, grow revenue and tap into liquidity that never sleeps.
Download Accelerating Global Payments for Your IT Services Business today to learn how Ripple can take on the complexity of cross-border payments for your business.