FX optimisation and the future of global payments

Shanleigh Oades, Director of US Digital FX, Business Development, recently took part in Fiserv’s Global Forum in Las Vegas

21 Oct 2024

Alongside industry specialists Shanleigh had a lively discussion on the evolving foreign exchange landscape, considering how businesses may be able to leverage FX optimisation to enhance their global payments strategy.

Key themes from the discussion included: the challenges merchants face; evolving consumer behaviours; the pressing need for innovative solutions; insights into the industry’s future. Below we’ve expanded the key themes from the session:

The challenges merchants face

It’s important to understand that merchants may face a multitude of challenges spanning various aspects of the payment process. However, two key issues appear to resonate most strongly with international customers.

Global merchants face Currency rate fluctuations and volatility. Unpredictable exchange rates can result in lost revenue or unexpected costs, impacting a merchant’s bottom line.
Opaque cross border payment fees. Hidden costs, including currency conversion fees, can lead to a subpar customer experience and an impact on profit margins.

We know cross border payments generally attract higher fees than domestic payments, and consequently many global merchants consider cross-border payment fees a significant barrier to growth. So, with the global cross-border payments market projected to grow exponentially by 2027, understanding and addressing these challenges will be crucial for merchants to remain competitive and minimise related market losses.

Evolving consumers behaviours

Consumer behaviour is constantly evolving, as we find ourselves in an ever-changing era, driven by demographic shifts, technological advancements, and sustainability / ethics. But how is customer behaviour evolving?

The ongoing adoption and digital transformation is central to the evolution. For example, e-commerce and mobile-first technologies are revolutionising how consumers shop, research, and engage with brands. We now see half of global consumers use social media to discover products. Simply put, consumers have more options than ever, with technology enabling easy price and product comparisons, resulting in a growing and influential social commerce space.

The pressing need for innovative solutions

Innovation is needed to tackle overly complex and inefficient FX processes and achieve potential benefits. Some solutions could help:

Automated currency risk management. Full automation with tailored FX rate hold periods. The purpose is to simplify FX risk management and improve customer journeys by unlocking a local shopping experience in a varying range of competitive currencies, reducing cart abandonment.
Revenue capture and market expansion. The aim is to capture FX revenues that might otherwise be hidden or unknown and enable quick and easy expansion into new markets with tailored FX risk management.
Visibility and transparency. Support informed decision making and driving operational efficiencies.

Insights into the industry’s future.

Over the coming years, merchant FX is expected to undergo a significant evolution, driven by changing consumer buying behaviours. As global commerce grows, merchants will likely face increasing market-related risks. To adapt businesses may need to consider the following:

The Macro environment – speaking to technology tools and systems; as well as responsibility to society and regulation.
Value creation – leveraging data flows and insights enabled though technology.
Value capture – meeting evolving customer expectations.

Want to know more?

If you found the above insights helpful, and would like to learn more, please reach out to Shanleigh Oades.

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