In an interview with CanadianSME Small Business Magazine, Roy Farah, Senior Vice President of Global Payment Solutions at Corpay Cross-Border Solutions, discusses the unique challenges NGOs face with cross-border payments. Unlike other organizations, NGOs often operate in emerging markets, requiring payment providers with deep experience in managing complex regulations and real-time tracking capabilities. Corpay’s approach involves leveraging strong in-country relationships to offer favorable rates and seamless processes, making it easier for NGOs to execute time-sensitive transactions. Roy’s insights reveal a shifting landscape, where specialized payment providers are enabling NGOs to navigate these complexities, ensuring funds reach their destinations efficiently and cost-effectively.
As SVP Global Payment Solutions at Corpay Cross-Border Solutions, Roy is responsible for leading the development and commercialization of key integrated payment verticals across the Cross-Border business. He works in conjunction with Cross-Border’s Regional Managing Directors, Enterprise Sales Leaders, and the Product Management Team to advance the company’s efforts aimed at building a world-class cross-border payments automation firm. With over 23 years’ experience in cross-border payments and currency risk management, Roy is an industry veteran who has held various Finance and Commercial leadership roles and brings a wealth of experience and expertise to the Cross-Border business, with specific knowledge and successful track record in Financial Institutions, NGO’s, Education and Legal customer segments.
Roy, with your extensive experience in cross-border payments, what would you say are the top considerations NGOs should keep in mind when selecting a payment provider? How do these considerations vary from those of other types of organizations?
NGOs have distinct and often unique requirements related to cross-border payments when compared to other types of organizations; therefore, they will have different considerations when selecting payment providers. Most NGOs are required to make payments to emerging markets such as Africa, South America, and Asia. As a result, the most important consideration is the payment provider’s experience and ability to send payments to emerging markets in an efficient, expedited, and cost-effective manner. Transferring funds to certain emerging markets carries unique challenges due to various country-specific requirements and local regulations; this can result in errors, delays, returned payments and higher costs due to duplicate fees and high exchange rates. NGOs need to make sure that a payment provider has extensive In-country experience in illiquid and exotic currency markets to help overcome complicated regulatory requirements.
The ability to track payments is another important consideration. NGO payments are often critical and time sensitive. They will need to ensure that the payment provider is able to track the status of the payments in real time; similar to a FedEX package.
Lastly, NGOs are often subject to enhanced reporting and audit requirements, so an important consideration is the financial stability, reputation, and dependability of the cross-border provider, as such factors ensure they’re able to meet such requirements.
Could you explain the advantages of working with a specialized payment provider like Corpay Cross-Border Solutions versus traditional banking institutions, especially for organizations involved in international operations?
Working with a specialized payment provider such as Corpay has several advantages.
As payments experts, we can leverage our in-country relationships to offer advantageous rates and expedited payment delivery for organizations that operate in emerging markets. We also help ensure efficient delivery of funds through an automated and streamlined payment process allowing for enhanced productivity for NGO staff. This usually requires limited to no investment on behalf of the NGO or the SME.
Traditional banks also have automation tools, but they are usually reserved for their largest and most profitable clients, and will often require significant IT investments. On the contrary, for many NGOs, partnering with a payment provider may result in enhanced efficiencies, improved service levels and potentially lower total costs. That being said, it’s important to factor in the size of the business. If an NGO has one or two small international payments per year it may not be worthwhile to consider a specialized payment provider at this time.
For businesses operating across borders, currency risk can be a significant concern. How does Corpay Cross-Border Solutions assist these organizations in managing their currency risk, and what strategies do you recommend?
Currency fluctuation is always a significant risk for businesses operating across borders. This is especially true for a Canadian SME or NGO due to limited acceptance of the Canadian Dollars outside of Canada. Corpay has a specialized currency risk team that supports organizations in mitigating the risk of currency fluctuations. We have a number of strategies that can be tailored to the specific needs of an organization based on several factors such as risk tolerance, time horizon, and the sensitivity of the business operation to currency fluctuations. The strategies range from a basic forward that allows an SME or NGO to lock in the exchange rates to a more complex structured options product that allows the organization to benefit from participation in positive currency movements, while also providing varying levels of protections. The Corpay team will work with each client to help design and implement a currency risk strategy that is unique to their business. As an example, an NGO may use a simple forward to lock in the Canadian Dollar cost of a future project outside Canada, and have full certainty of the costs; whereas an importer may decide to use a currency option strategy to benefit from any appreciation of the Canadian Dollar, and potentially reduce the cost of their imports while also providing some level of protection in the event that Canadian dollar depreciates.
Given your role in leading the development and commercialization of integrated payment verticals, how do you tailor Corpay’s solutions to meet the specific needs of diverse customer segments like financial institutions, NGOs, educational bodies, and legal firms?
Each of these client segments have unique requirements; we believe adding real value to a client comes from creating bespoke payment solutions specifically geared to the needs of their business and the industry in which it operates. For example, many financial institutions would like to offer international payment solutions to their clients; We allow financial institutions to leverage our international payment infrastructure, platforms and help them expand their services to allow their clients to better compete on the global stage. In a nutshell, our solution allows financial institutions to offer international payments capabilities to their own clients, with limited or no investment in products or payment infrastructure.
Law firms on the other hand have a specific need to automate large numbers of invoices; this is especially true for law firms involved in international patents. We have created a solution specifically for law firms where we automate invoices, eliminate FX exposures by hedging at the invoice level, and integrate directly into billing, ERP, treasury, or bank systems of the law firms. This solution has allowed us to become a market leader in processing law firm payments in the US, and we are now starting to expand into Canada by offering this same solution to Canadian Law firms.
Reflecting on your 23 years in the industry, could you share a personal anecdote that highlights a key moment of learning or change in cross-border payments and currency risk management? How have you seen the industry evolve during your career?
The payment industry has evolved considerably over the last two decades. In the past, an SME doing business in Europe had to open a Euro bank account, which can be inefficient and complex. Today, a corporation doing business in Europe can simply use one of the multi-currency accounts offered by a payment provider, such as Corpay, which significantly reduces the complexity and costs of doing business outside Canada. These accounts are available in many currencies and can be used for collecting and holding foreign currencies, as well as paying invoices in foreign currencies.
Risk management is another area where I have seen major changes. In the early 2000s, forward contracts were the only way SMEs could mitigate currency risks. Today, an SME has a vast array of choices through the use of currency options, which often require no upfront payments and can be flexible in order to meet the SME’s unique requirements.
