AI for Cross-Border Payments – Why Not?

At the recent Mobile World Congress (MWC 2024) held in Barcelona, Spain at the end of February, the Military Industry and Telecoms Group (Viettel) officially introduced to the global tech community the "Vi An – Human AI" (AI Digital Human), the first hyper-realistic Human AI from Vietnam.

This robot, a source of national pride at the event, has potential applications in the tourism industry as it can present knowledge about various fields such as lifestyle and cultural tourism, and assist Viettel in showcasing its products and services worldwide.

And what about the fintech sector - especially fintech related to cross-border payments? In this article, let's join FinFan in exploring whether Vietnamese people can develop and utilize AI in fintech and how it can support the cross-border payment industry.

The Challenges of Traditional Cross-Border Payments

First, let's review the difficulties that traditional cross-border transactions bring to users with specific examples that FinFan has had the opportunity to support customers with.

During our customer service interactions, FinFan has often received positive feedback from customers due to the solutions we provide, which greatly benefit Vietnamese users worldwide. We have supported customers in resolving the following issues related to traditional cross-border money transfers to Vietnam through banks:

High Costs When Transacting Traditional Cross-Border Payment.

As outlined in the article regarding the difference of average additional cost between cash pay-out and bank account, exchange rates, and service fees for cash pay-out transactions are consistently higher than for direct transfers to bank accounts.

This is a common issue that FinFan's customers frequently encounter when they are unaware of the cross-border money transfer services offered by FinFan's partners such as Remitly, Ria Money Transfer, Paysend, Sendwave, etc.

Instead, they opt to visit any international bank in their residing country and send money to Vietnam, with recipients often choosing to receive cash.

Slow Processing Times When Transacting Traditional Cross-Border Payments.

Another issue that FinFan's customers often encounter before they turn to the services combined by FinFan - international cross-border money transfer partners and Vietnamese bank and e-wallet partners, is that they frequently face delays in their sent money reaching the end users.

Meanwhile, they send money regularly every month, and their relatives also need those funds to cover living expenses.

In another scenario, if they use that money for investment purposes, they may miss out on opportunities to invest in financial markets as they fluctuate continuously.

Lack of Transparency When Transacting Traditional Cross-Border Payment.

The journey of a cross-border payment can be opaque, with senders and receivers often unaware of the status of their funds and the fees deducted at each step.

Without the reports from FXC Intelligence and analysis from FinFan on LinkedIn, customers would find it difficult to understand why they incur fees of up to $6 (over 1%) for every $500 they transfer.

That's just the fee when you transfer money cross-border through banks. Some Vietnamese people abroad often transfer money through brokers in their host country because they're not yet familiar with the local lifestyle and technology. However, they will incur even higher and less transparent fees through this method.

Regulatory Complexity When Transacting Traditional Cross-Border Payment.

Different countries have different regulations, making compliance a significant hurdle for businesses looking to operate internationally.

This frequently occurs with cross-border transactions related to import and export activities when legal documentation and the slow resolution by banks are the only obstacles hindering the timely processing of cross-border import/export payments. This delay leads to businesses struggling to mobilize capital for their upcoming business plans.

Read more:

. CAN B2B CROSS-BORDER PAYMENT ESPECIALLY IN IMPORT AND EXPORT PAYMENTS TO VIETNAM LAST IN 8 SECONDS

In terms of C2C payments, compliance issues also pose a slight inconvenience for individuals sending and receiving cross-border payments, as they are required to carry their personal documents to the bank or nearest money transfer location to proceed with the next steps of the cross-border payment process.

How AI Can Transform Cross-Border Payments

Cost Reduction When AI Intervenes in The Cross-Border Payment Process

AI can help reduce costs in several ways. By automating processes that are currently manual, AI can reduce the labor costs associated with cross-border payments.

For example, instead of banks having to allocate a teller to manually input customer information into the computer when sending and receiving money at the counter, with AI, customers can easily perform these tasks themselves at the counter. This helps reduce the costs incurred by customers significantly.

Machine learning algorithms can optimize currency conversion rates and transaction routing, minimizing fees.

For instance, instead of sending money to a bank where customers have to search and select the bank with the most favorable exchange rate, now, with AI technology, some of FinFan's partners have implemented this feature for users within a single app. After they finish checking the exchange rates, they can proceed with the next steps without leaving the application.

At the same time, the application will commit to always providing customers with the most cost-effective exchange rates.

Cross-Border Payments Process Will Occur Faster and More Efficient When AI Intervenes.

AI-driven systems can process payments in real-time, significantly reducing the time it takes for funds to be transferred internationally.

This issue was also mentioned in a previous article related to instant settlements. Nowadays, customers no longer need to wait for too long as they can almost instantly receive the money transferred by their relatives or business partners abroad directly into their own bank account.

This also frequently occurs with cross-border payments using cryptocurrency.

Read more:

. 3 BENEFITS THAT INSTANT SETTLEMENT SERVICE BRINGS TO BUSINESSES

. Crypto Settlement

. Crypto Payments

Machine learning algorithms can quickly verify transaction details, ensuring that payments are processed accurately and efficiently.

Furthermore, AI can analyze patterns and predict the most efficient routes for payments, avoiding delays and reducing the reliance on multiple intermediaries.

With AI Transparency of Cross-Border Payments Can Be Enhanced

AI can provide greater transparency in the payment process. With AI-powered tracking systems, both senders and receivers can monitor the status of their payments in real-time.

Blockchain technology, often integrated with AI, can offer an immutable ledger of transactions, ensuring that all parties have a clear and verifiable record of the payment journey.

Additionally, AI will assist personal and corporate financial managers in planning and budgeting for departmental or personal needs in a systematic and reasonable manner.

For instance, with personal finance, we have the 6 Jars principle. By setting up AI, the system will automatically deduct from your balance and allocate it into the jars in the most appropriate way.

For businesses, financial managers can set up budgets for the necessary categories to develop their enterprises.

With AI Compliance of Cross-Border Payments Can Be Simplified

Navigating the regulatory landscape of cross-border payments is complex, but AI can help. AI systems can be programmed to understand and comply with the regulatory requirements of different countries.

They can automatically update compliance protocols as regulations change, reducing the burden on businesses to keep up with the latest rules.

A prime example of this is that, with AI, corporate and personal financial managers can stay updated on the latest regulations related to P2P payments and blockchain technology.

This support enables them to make informed decisions when selecting the most suitable payment services and methods in the Vietnamese market.

Another example related to import/export issues is the necessary documentation for international goods warehousing.

With AI, both importers and exporters can prepare the required information in advance and sometimes submit or retrieve data directly on their computers, with all the necessary KYB (Know Your Business) steps completed before the payment process begins.

With AI Security of Cross-Border Payments Can Be Enhanced

AI is adept at detecting patterns that indicate fraudulent activity. By analyzing vast amounts of transaction data in real-time, AI systems can identify and flag suspicious activities, providing an additional layer of security. This proactive approach to fraud detection can help protect businesses and individuals from financial loss.

From the Success of Vi An to FinFan's Milestone in Applying AI to Payments

FinFan's Milestone in Applying AI to Payments

Building on the momentum created by Vi An, FinFan is taking significant strides in integrating AI into the payment industry, particularly focusing on cross-border import/export payments. This application of AI is poised to address numerous challenges and bring transformative benefits to the sector.

Addressing Traditional Cross-Border Payment Challenges

Traditional cross-border transactions are fraught with issues such as high costs, slow processing times, complex compliance requirements, and lack of transparency. These challenges often result in delayed payments, high fees, and inefficiencies that hinder businesses and individuals alike.

Practical Applications and Benefits

Simplifying Customer Experience

For instance, rather than visiting a bank and manually inputting customer information, AI allows customers to perform these tasks effortlessly at the counter or even remotely. This convenience reduces costs and improves the overall customer experience.

Integrating with Blockchain and FinTech Solutions

FinFan's partners, using AI, offer features such as real-time exchange rate comparisons within a single app, enabling users to proceed with transactions without leaving the application. The app commits to providing the most cost-effective exchange rates, further enhancing user convenience and savings.

Enhancing Import/Export Efficiency

AI assists in managing the complex documentation required for international goods warehousing. Importers and exporters can prepare and submit necessary information in advance, with AI ensuring that all KYB (Know Your Business) steps are completed before the payment process begins, thus preventing delays.

Read more about cross- border import and export payments here.

This article was curated and authored by FinFan's market research and development team, alongside our marketing department.

About FinFan

FinFan is a cross-border embedded financial services company that focuses on mass disbursement, fund collection, card processing, IBAN, and digital APMs solutions, which can provide valuable input and integration on and for the same.

FinFan is already integrated with almost the world's well-known MTOs, PSPs, switch, and core fintech platforms such as Money Gram, Thunes, Qiwi, Remitly, World Remit, Bancore, PaySend, Terrapay, Ria Money Transfer (Euronet), Dlocal, Ripple, TripleA, FoMo Pay, Wings, etc.

For more information, please contact us through:

🌐https://finfan.io

📞(+84) 2866 85 3317

✉ support@finfan.vn

LinkedIn: FinFan