Knowledge Circle webinar wrap up: Selling cross-border; can payment processors solve the FX challenges for merchants?

Banking Circle’s latest Knowledge Circle webinar brought together a panel of experts to discuss what today’s merchants want from their PSPs and acquirers to help them sell cross-border – and the new solutions that can support meeting those needs.

Moderated by Esther Groen (Advisor to Holland Fintech & Executive Board Member EWPN), the panel comprised Nicole Asling (Head of Vertical Partners at FIS Worldpay), Eamonn O’Shea (CEO at Continuum Commercial Solutions) and Nick Tubb (Global Head of FX Sales at Banking Circle).

Nick Tubb kicked off the discussion, explaining why this is such an important topic. He described how a growing number of ecommerce merchants are expanding into new geographies and working with the payment processing community to make sure they are offering the optimal customer experience for their new target demographic, including a familiar checkout experience, the right language and the right payment methods according to local preferences. He also highlighted the importance of providing customers with the option of paying in their own currency, but that this brings added volatility risk to the payment provider or the merchant.

Eamonn O’Shea added that at a recent retail industry event he saw very little discussion around payments for customers, showing that retailers may not be prioritising the issue. However, he pointed out that while retailers are quite rightly focused on the browse to buy conversion, statistics show that if you allow customers to choose the payment method and currency, conversions increase by at least 20%.

This provision does, however, raise the question of who takes on the FX volatility risk when a payment is instructed in one currency and settled in another, potentially days later when the FX rate may have changed. Eamonn confirmed that this is one of the reasons Continuum is partnering with WorldPay and Banking Circle, to help merchants and financial institutions tackle that challenge.

Market trends

Nicole Asling turned the focus of the debate to the importance of having the right expertise regarding FX volatility, as demonstrated by the dramatic impact the Russia-Ukraine crisis has had on currency trading. She explained that merchants should make sure they work with companies who are well versed in such fluctuation and volatility, and who understand what is happening and are able to circumvent the challenges.

Nicole also pointed out that the conflict is not the only thing affecting trends in the cross-border payments industry today – COVID-19 is still having an effect. The pandemic has driven a number of new trends across the industry, with increased global ecommerce being one of the most significant changes.

Nick added that the increase in cross-border ecommerce has led to the merchant and processing communities working together to optimise performance around local payment methods. As examples, he cited two geographies with very different local preferences – consumers in the Netherlands prefer to pay by real-time bank transfer, while in Japan the preference is to obtain a confirmation code and go to a local convenience store to pay over the counter in cash. Clearly, retailers hoping to convert browsers to shoppers in these two regions need to access and offer a wide range of payment solutions.

Nick went on to say that while he believes a good deal of work has already taken place to make this a reality, the conversation has not gone far enough regarding how best to handle the FX risk that is inherent in overseas sales. This is of particular significance amidst the geopolitical uncertainty that remains today.


In response to a question from Esther Groen, Eamonn detailed the issues he believes are holding back global ecommerce. An important road block is a lack of awareness around the issue of FX. Merchants are aware that there is an FX Manager but may not appreciate the importance of that role.

Even if you offer a product that is paid for and downloaded immediately, for example, the merchant is still exposed to FX risk from the date of authorisation until clearing and settlement is complete. When it comes to delayed fulfilment the gap between the price paid and the funds received can be even greater if there is a significant change in FX rates between the day a customer orders a sofa and the day the payment is released, potentially weeks or months later. Merchants don’t necessarily realise that they need a partner to manage that FX exposure and reduce the risk from volatility.

Main challenges

The panel went on to discuss the results of an audience poll focused on the main challenges of offering cross-border ecommerce. Results were split relatively evenly across the four main issues – risk of currency fluctuation, building the right technology and functionality, visibility on FX pricing and getting the customer experience right.

Nick Tubb pointed out that the even spread of responses illustrated that these are all important and significant challenges that businesses are currently facing. He was unsurprised that the risk of FX fluctuation came out slightly ahead of the others, as it can have the biggest impact on profit and loss.

The importance of merchants, PSPs and acquirers assessing the appetite to build tech and functionality in-house was highlighted by Nicole Asling. Working with a third-party to deliver the necessary tech allows a business to effectively buy-in expertise, increasing efficiency and reducing risk. Eamonn agreed, adding that a third-party will have a dedicated team to manage volatility, build in tolerance levels and constantly monitor levels as well as the impact of external events.

Key takeaways

The key takeaways from the panel:

Nicole Asling: A clear need to address concerns around currency fluctuations while still recognising where revenue opportunities exist and are not being accessed in the way they should.

Eamonn O’Shea: Merchants should ask their providers how FX could be better managed, and Payment Providers should work with a third party to find out how to do things better for them and their customers alike.

Nick Tubb: Processing payments is being increasingly commoditised in a continuously competitive market. Financial institutions should, therefore, keep in mind that reducing FX exposure risk will be a real value-add for merchants looking to sell cross-border.

Watch the full session and all previous Knowledge Circle webinars on demand here.

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