Two fintech companies are partnering to facilitate recurring cross border/cross currency payments without the use of a credit or debit card and put that capability within reach for smaller businesses. GoCardless has partnered with money transfer company Transferwise to facilitate consumer and business transactions from one transaction account to another using checking account, not card, credentials. Paying invoices through account to account transfers may not be particularly difficult for a domestic transfer, but managing foreign exchange and local laws gets complex very quickly, particularly for medium and smaller companies. More on the GoCardless and Transferwise partnership from Forbes:
Direct debits are favored by many companies because they represent a reliable and low-cost way of collecting money month by month. However, they have historically required the customer to spend a certain amount of time setting up the bank transfer arrangement and there can be resistance – sometimes it’s just easier to key in a card number. GoCardless set out to solve that problem by making the process as simple as possible. Companies seeking to take recurring payments from customers can place a tool on their websites or send a link to the same tool via email.
The problem for businesses trading overseas is that each jurisdiction has its own banking rules, some of them relating to direct payments. The challenge facing GoCardless lay in extending its model into territories where different regulatory requirements applied. In January of this year, the business was already establishing offices in Europe and beyond in order to increase its reach.
Now the new partnership with Transferwise businesses to set up direct payments in 30 countries in multiple currencies using a single online interface. According to [GoCardless co-founder], Takeuchi, the creation of the business will be something of a game-changer for certain types of business. “Until now, if you wanted to take recurring payments, you have had to use something like Visa or Mastercard,” he says. In his view, the card method is both expensive and subject to high failure rates. “This is a big problem,” he adds.
Overview provided by Sarah Grotta, Director, Debit and Alternative Advisory Practice at Mercator Advisory Group
