In the last 30 years or more, the post-working environment has changed dramatically with more people moving abroad to enjoy a relaxed life-style in sunnier climates when reaching pensionable age. One of the key tools that enables families to enjoy retirement, is the ability, certainty, and assurance in receiving the expected monthly pension payment into the beneficiary’s local bank account, especially when overseas. If the individual concerned is, or was a UK National and the company paying the pension is or was a former employer in the UK where the beneficiary worked, the payment transaction is likely to emanate from a UK bank account, and travel cross-border for the credit of the local (in country) pensioner/beneficiary bank account. It is the same for a UK State pension. This payment type is termed: a “Cross-Border Repetitive Payment”. However, Repetitive Payments are not only pension payments; but are dividends, royalties, and salaries for those working abroad. They are called “repetitive” as the payment transaction occurs every month or every few months, depending upon the payment type.
Much of these international payments sound simple and easy to undertake; and for most part they are, when making ACH type overseas payments. But there are a number of challenges and encumbrances that can cause delays and complete payment failures.
Here are just a few examples:
- FX spread deployed for the freely commercial currencies as opposed to “exotic” currencies, and Central Banks’ fixed FX rates
- Timescale of transaction from initiating bank to beneficiary bank
- Connectivity, interoperability and potential tortuous path between: initiating bank, potential correspondent bank or banks, local domestic in-country ACH and “gateway bank;” and ultimate beneficiary bank
- Given the above point: fees can be taken along the payment route, including “bene” deductions and/or “credit deductions”
- Fee for the “initiating” payments transaction itself levied by the UK initiating/ordering party’s bank
- Maintaining updated information in the ordering party’s CRM system with regards to: the pensioner or any overseas beneficiary who: (1) is living or not; (2) changes in beneficiary account details; and (3) changes in beneficiary’s address (4) returned payments
Above are just some of the challenges; there are of course many more. Those ordering parties encountering these challenges should contact The Payments Business (www.thepaymentsbusiness.com) as we have many consultants that can assist in suggesting simple, and straight forward deployable solutions, that overcome these challenges.
If you would like to talk about how the team at The Payments Business can help you, please contact me, Eliot Heilpern (email@example.com). In any case; as I would urge you to join the Payments Business either on the website or on the LinkedIn Group page. That way we can keep you informed and totally up to date about developments on Cross-Border Repetitive Payments.
Eliot Charles Heilpern; Membership Director of The Payments Business