Citibank is speeding up cross-border payments for international business clients by eliminating the need for businesses to convert bill amounts to the currency of the recipient.
Through a new tool called Citi Global Collect that it rolled out in late November, Citi is eliminating a pain point for its global client base. Since the bank processes $4 trillion in client payments daily, the new tool will go a long way in helping them manage rate fluctuation risks.
“This gives the option to the customer in Taiwan to make a local currency payment, hedge the exposure and then eventually have the money transported back into U.S. dollars,” said Manish Kohli, global head of payments and receivables at Citi.
Through the new solution, Citi clients can upload and send digital invoices through Global Collect, and the payer chooses when they want to pay and what currency they want to use. The technology solves for foreign exchange exposure, so if payers want to pay 60 days after receiving the invoice, they pay the agreed-upon amount when they received the invoice regardless of rate changes.
Global Collect supports ACH, corporate card and wire transfer payments. Kohli said the tool is available in the U.S. and Canada, but the bank intends to make it available throughout Citi’s international footprint within the next few quarters.
The bank developed the new solution through a partnership with HighRadius, an accounts receivable startup that Citi Ventures, the bank’s corporate venture arm, invested an undisclosed amount in last year. HighRadius’ tech offerings help businesses onboard and bill customers. The company, which was founded in 2006, offers automated credit scoring, invoicing and dispute resolution services. Its list of clients includes big names like Unilever, Starbucks and Sony.
Citi is overhauling its cross-border payments solutions as a number of other financial institutions and startups are working on similar features. Wells Fargo, for example, provides cross-border business-to-business payments through technology from TransferMate. This summer, American Express acquired payments company Acompay to upgrade its business offerings. Meanwhile, GoCardless and TransferWise, teamed up last month to tackle cross-border business payments.
Erika Baumann, senior wholesale banking analyst at Aite Group, said although HighRadius’ accounts receivable technology is not completely unique in the industry, it is a market leader. The real value of its offerings, she noted, is the combination of its cross-border payments tools with credit underwriting and risk scoring.
“Put all of [these offerings] together and then include the FX piece, there is a huge business value for Citi’s business clients,” Baumann said.
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