While most international transactions are made via alternative payments and online payments, old-fashioned methods are still being used by some businesses, especially in the U.S. According to a study done by Currency Cloud, almost half of U.S. businesses use paper checks for international payments. In the U.K. only 30 percent of businesses use paper checks for international deals. 70 percent of them prefer to use some type of electronic payment. Apparently, half of the U.S. businesses who participated didn't know of another, cheaper way of handling international payments. While it looks as though the U.K. is more advanced than their U.S. counterparts, some experts think that could change soon.
"We are experiencing a tech-enabled revolution which is spawning the On Demand economy," said Mike Laven, CEO of Currency Cloud in a press release. "Consumers already benefit with near real-time services such as Uber, GrubHub and Etsy. In this context, it is imperative businesses implement solutions that allow them to remain agile in order to compete. It's surprising to see that while consumers are adopting payment technologies such as Venmo and Xoom, the vast majority of US businesses still rely on paper checks for international payments."
Laven told the publication Payment Week in a interview that U.S. businesses are already behind the curve on payment technology. He said everyone is connected online now and paper payments just don't make sense anymore. He expressed his surprise that the U.S., the world's largest economy, is behind the times.
"The more U.S. businesses become aware of the benefits of newer international payments processes the quicker they will transition," Laven told Payment Week.
The study also revealed 37 percent of U.S. businesses commonly complain about the pace at which international payments are processed. This isn't surprising considering these same businesses tend to use up-to-date payment methods for transactions within their borders. 40 percent of the businesses in the U.S. that are aware of the newer processes said the implementation of the new payment methods is one of the reasons they are avoiding international payments.
Laven said in the interview with Payment Week that the U.S doesn't do as much international business as the U.K. does. This likely contributes to the lack of innovative international payments.
The U.K. isn't waiting for the U.S. to catch up
Laven told Payment Week the U.K has always been ahead of the U.S. when it comes to payment technology, due to the way the country is governed.
"The U.S. financial system is slow to change because it is regulated by 50 states rather than a central set of regulators like the ECB and BOE," Laven said in the interview.
While the U.K. will probably always be ahead, soon more U.S. businesses will have to start conducting international payments in a method other than paper checks, or it could hurt relationships between the parties involved in the transactions. Laven told Payment Week that new payment methods like e-wallets, such as Apple Pay or Google Wallet, could see more use in the future. He said the main obstacle has always been to educate American businesses on more efficient ways of completing transactions.