A global payments system allows companies and marketplaces around the world to make and receive cross-border payments in multiple certified international currencies.
Although currencies may vary between payment services, these systems enable international payment solutions – even more critical in recent years.
What Is a Global Payment System?
The definition of a payment system is, ‘any system used to settle financial transactions through the transfer of monetary value. This includes the institutions, instruments, people, rules, procedures, standards, and technologies that make its exchanges possible’.
The ‘global’ element comes into play when the sole supplier, vendor, company, or marketplace has a bank account in a country different from the one in which the business is based.
How Do Global Payments Work?
Global payment processing involves multiple steps.
First, a legal entity needs to be set up in every country that a company operates in. Next, the money must be transferred internationally. This incurs charges, which will differ depending on the transfer provider. To pay employees abroad, the money needs to first be transferred to a local bank account and then processed for payroll.
Without a global payment processor, companies have to make sure pay rates are accurately calculated, which can be challenging due to constantly wavering exchange rates.
Global payment systems automatically convert currencies, which ensures recipients receive the correct sum.
What Are the Benefits of a Global Payment System?
Global payments system acts as the intermediary between the buyer and the seller, upholding the integrity and confidentiality of:
- bank account details
- the transaction total
- built-in fraud detection systems and protocols
- technological awareness that the payment has been processed in the correct currency
A global payments system is classed as a Software as a Service (SaaS), offering a relatively cheap option for vendors to carry out their business without having to dedicate a lot of time or resources to develop their own payment processing system. Operating as a SaaS, such systems usually price depending on the rate of transactions being actioned, business type, and industry.
How Does the System Make Global Payments More Secure?
Transactions and payments can happen physically with credit or debit cards on a card reader or through online transactions via a bank or private vendor using a virtual payment system to facilitate and secure payments.
Reports of transaction amounts, who the vendor and buyer were, the geographical location of where the transactions took place, and any fraud attempts are kept on behalf of the Payment Service. However, they can be retrieved by the vendor, company, or business. This offers full transparency, earning insights and the peace of mind that the transaction history can be retrieved if needed.
In the case that something were to go wrong, such as a transaction failing, a fraud attempt detected, or something unforeseen happened, the exact cause of what went wrong can be identified by local and online support teams, which is typically offered as part of the SaaS package.
The usage and popularity of global payments have steadily been growing year after year, so without a secure and efficient global payment method to facilitate these transactions, businesses would cease to function.
Why Are Global Payments Important?
2020 saw the highest number of new companies created since 2011, even with the pandemic affecting businesses and online marketplaces in all industries on a global scale. This provides factual evidence that even with the state of the world, international payment systems are an essential piece of the puzzle that ensures online payments and cross-border transactions can take place.
Duck Creek Payments provides businesses with the freedom to grow and establish new and empowering partnerships. Payment solutions have been a challenge for insurance companies in particular. However, we help insurers overcome this. We supply the flexibility to add any payment provider within minutes in a straightforward manner.
Payments are mission-critical for insurers, and through Duck Creek Payments, they can more easily set up alternative payment methods to create the best customer experience. This includes bank digital, digital wallets, credit cards, vouchers, and more.
For secure and easy global payments, get in touch with our team today.
What Is a Global Payment System Example?
Some of the global payments vendors include Stripe, GoCardless, PayPal, and Adyen. These are a handful of the vendors included in the Duck Creek Payments marketplace, enabling insurers, in particular, to achieve international payment for claim payouts and premium collections.