International commercial card payments have long been an area beset with problems. Companies wishing to make cross border payments have to navigate through different rules and regulations, which often vary by region or even country. Further friction arises due to currency exchanges and other fees. Taken together, these barriers have made the use of commercial cards in international payments relatively rare.
However, where there are problems, there are usually solutions, and Boost Payment Solutions (“Boost”) is a company focused on providing them. Founded in 2009, the company now operates in 32 countries, including the UAE and Singapore.
PaymentsJournal sat down with Dean M. Leavitt, CEO of Boost, to discuss international commercial card payments, and how Boost is working with its partners to improve the commercial card payment experience. Joining us in the conversation was Steve Murphy, director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.
The international payments landscape
Although the use of commercial credit cards has been increasing in recent years, they account for only a fraction of the total commercial payment flows. Of the roughly $100 trillion spent on payment flows outside of North America in 2018, commercial card use totaled only $342 billion, according to a report from Mercator Advisory Group. Framed another way, commercial card use made up less than 0.5% of the total of business-to-business payments.
“Traditionally, international payments are made by wires, ACH, and even checks,” says Murphy, author of the Mercator report. “Cards haven’t been fully utilized.”
Leavitt notes that cards haven’t been utilized as much because, in part, card networks haven’t “really dove deeply into international transactions, certainly [with transactions] utilizing the card rails.” However, he points out that this is changing as more issuers focus on business-to-business transactions.
Another reason why companies have avoided using commercial cards for international payments is the existence of currency exchange fees and an unfamiliarity with regional differences in rules and regulations. He notes that unless the payments are optimized, companies could encounter more fees.
Therefore, Boost’s mission is to optimize the payment process.
How Boost optimizes international card payments
One major way that Boost seeks to optimize the payment process is by utilizing straight-through processing (STP).
STP allows transactions to be completed without the payee’s accounts receivable department having to physically get involved.
“All of our transactions are 100% straight-through processed,” says Leavitt. He explains that this means that the payment process and subsequent data exchange is a passive process for suppliers; the virtual card payment is made and settled without the payee needing to do anything. By making it a passive experience for suppliers, Leavitt says, payment acceptance will be increased.
Boost’s use of STP makes them unique because, as Murphy points out, “the level of straight through processing, even on domestic payments, is really low.”
In addition to making the process of completing a payment easier, Boost also streamlined the process of data exchange.
“The exchange of data between the trading partners is often as important as the movement of money,” explains Leavitt. This is especially true for mid to large market companies, as they often make multimillion-dollar payments that bundle together hundreds of different invoices.
Despite the need for better date exchange, Murphy notes how suppliers often receive payment information decoupled from the remittance data, which is causing a headache for their accounts receivable departments.
Boost is instead coupling the payment together with the invoice details in reports for both the buyer and the supplier.
“We are sending them the remittance report in a delivery protocol, and a format, that is either their native format or their preferred format,” explains Leavitt. “So it could be instantly, easily, and automatically ingested by their ERP or accounting system.” This makes it clear to the supplier when they receive a payment which invoice it applies to, and it makes it clear to the buyer what they paid for.
Boost also works to make sure payments are treated as domestic transactions whenever possible. Leavitt offers an example involving a hypothetical U.S. corporation with an affiliate in Brussels. When the affiliate in Brussels wants to pay suppliers in Belgium, Leavitt says, Boost will process that payment as a domestic transaction.
“We would have vaulted and tokenized in our platform a card that’s actually issued on a Belgian BIN, so that when we process that payment, from the supplier’s perspective, it will be treated as a domestic transaction,” explains Leavitt. By processing a transaction like this, Boost ensures that there are no cross border or currency exchange fees because the payment settles in the local currency.
“There really hasn’t been a one-stop shop where a payer can deliver a payment request to a whole bunch of suppliers across a whole bunch of regions globally,” says Leavitt, “and be able to process those transactions in the same consistent way where suppliers are optimized.”
Boost is positioning itself as that one-stop shop.