Visa: Cross-border payments are inefficient

A study conducted by Visa regarding cross-border payments has revealed that transactions are hampered by red tape and are proving inefficient, as payment system standards differ from one state to another, and international regulations are increasingly restrictive. “The growth of world trade and the improved efficiency of the supply chain makes it necessary to improve the cross-border payment system, which is currently inefficient and costly for banks and companies,” says Aliza Knox, senior vice-president of Visa Commercial. Cross-border payments account for almost 8% of the total payments worldwide, the study says. It adds, however that a precise appraisal on the volume of cross-border payments is difficult to make, given that financial institutions do not distinguish between local and international payments. Many transactions handled by banks and companies combine local payments with cross-border payments. The efficiency of cross-border payment systems can be improved, reads the Visa study, but in order for that to happen, it is necessary to invest in changing the systems used by companies and banks. “Since banks that are Visa members will move from the Visa CEMEA to the Visa Europe region, which is subject to the requirements of the Single European Payments Area since January 1, 2007, the Romanian payment system will be exposed to trade with fewer barriers among member states, which will lead to an increase in the number of cross-border transactions (…),” believes Catalin Cretu, vice-president of Visa International for Romania and Bulgaria.