How AI and Blockchain Innovations Are Reshaping Cross-Border Commerce | PYMNTS.com

The bigger the connected economy gets, the smaller the effort it takes to join.

In today’s increasingly interconnected world, cross-border commerce is no longer a fringe activity confined to multinationals. Small- to medium-sized businesses (SMBs), startups and even freelancers are now part of the global marketplace, engaging in transactions that span continents and currencies.

They aren’t doing it alone. As international transactions accelerate, technological innovations, particularly those in artificial intelligence and blockchain, are helping make business borderless.

News from this week illustrates the ways that a leaner, more efficient and more transparent cross-border experience is top of mind for growing businesses.

Amazon, for instance, is adding a fully managed global supply chain option to its lineup of supply chain services for sellers by the end of the year. Meanwhile, the Bank for International Settlements recruited J.P. Morgan Chase, Deutsche Bank, UBS, Visa and Mastercard for a blockchain-based cross-border payments pilot. And Apple is bringing its Apple Intelligence services, including AI translation, to more languages.

These technologies, alongside in-step advances in the payments sector, such as accounts payable (AP) and accounts receivable (AR) automation, are not only reducing the complexities and costs associated with international transactions but also opening up new opportunities for businesses to engage in the global marketplace.

Read also: Cross-Border Payments Cost Could Be Cut by Blockchain, If It Can Only Solve the Scale Problem

Breaking Down Traditional Barriers With Innovation

From AI translators that facilitate communication between international partners to blockchain technologies like smart contracts and tokenized payments that streamline and secure financial processes, the landscape of global commerce is evolving.

Historically, a handful of dominant correspondent banks have been at the center of the cross-border payments market, with little competition — and little innovation — to be had. For small businesses, this operational backdrop made expanding and gaining market share internationally a daunting exercise.

Handling multiple currencies is one of the more cumbersome tasks for businesses engaged in cross-border commerce. Traditional systems for managing AP and AR often involve manual processes, are prone to errors and can be slow in adapting to currency fluctuations. This is especially problematic for SMBs that lack the resources for sophisticated financial departments.

However, ongoing and increasingly powerful advances in payments automation, robotic process automation (RPA) and AI hold the potential to automate currency conversions, ensure compliance with local tax regulations and optimize payment schedules based on currency exchange rates.

For example, next-generation payments systems can automatically match invoices to payments, reconcile financial discrepancies, and flag unusual activity that might suggest fraud or payment errors. This allows companies to reduce their reliance on manual reconciliation, which not only saves time but also enhances accuracy and financial control.

The ability to process payments and receive revenues in multiple currencies without expensive third-party intermediaries enables businesses to operate more cost-effectively.

As the PYMNTS Intelligence report “Cross-Border Sales and the Challenge of Failed Payments” revealed, faulty cross-border payments cost U.S. merchants at least $3.8 billion in sales last year.

Still, ensuring that these systems are transparent, reliable and secure is crucial for businesses to fully benefit from them.

Simplifying Financial Complexities and Unlocking Working Capital

Cryptocurrencies, long viewed with skepticism in mainstream finance, are increasingly being considered as a viable payment method in cross-border commerce. The adoption of blockchain technology and stablecoins — cryptocurrencies pegged to a stable asset, such as the U.S. dollar — has mitigated much of the volatility that initially deterred businesses from embracing the sector’s solutions.

The PYMNTS Intelligence report “Can Blockchain Solve the Cross-Border Payments Puzzle?” explored how blockchain could revolutionize cross-border payments, assessed its current adoption and examined the future implications for financial institutions and businesses.

The report found that for businesses, cryptocurrencies offer several advantages, particularly in cross-border transactions. Traditional payment methods, such as wire transfers or credit card payments, can take days to process and incur hefty fees, especially when currency conversions are involved. Embracing cross-border blockchain solutions, by contrast, enables near-instantaneous transactions at a fraction of the cost, making them particularly attractive for businesses that operate in countries with unstable currencies or high inflation.

Still, concerns around blockchain’s regulatory uncertainty, especially cryptocurrency payments and the use of blockchain in legal agreements, remain a risk to be mitigated. Different countries have varying regulatory frameworks, and navigating this patchwork of rules can be daunting for businesses.

One of the more immediate challenges in cross-border commerce is language. Whether it’s communicating with suppliers, negotiating contracts or navigating foreign regulations, the language barrier can slow down or even derail transactions. While human translators have long been a solution, the rise of AI-powered translation tools is increasingly offering businesses a faster and more scalable option.

As AI and blockchain evolve, their combined potential will likely lead to even more sophisticated and seamless cross-border solutions. For companies willing to embrace these innovations, the future of global commerce could have immense promise — as long as it is unlocked responsibly.

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