Breaking down barriers: Inside Thunes’ borderless payment network
By Andrew Stewart, Chief Network and Account Management Officer
Many of us take for granted the reliability and seamlessness of digital payments. When we make a purchase or transfer money, money movement appears automatic and instantaneous.
Behind this facade lies a complex infrastructure that ensures our transactions succeed. This article explores how Thunes’ payment network transfers money rapidly and solves long standing interoperability challenges.
The past and present of the global money movement
International money movement has vastly evolved over the past century. Initially, cash was physically moved from one country to another, deposited in banks and recorded in ledgers. Afterwards, Telex technology came into play making wire transfers possible. Still, cross-border payments were slow and analogue, limiting the potential of global financial services.
In 1973, 239 banks from 15 countries assembled to address these inefficiencies. Together, they formed the cooperative utility, Swift, the Society for Worldwide Interbank Financial Telecommunication. Swift went live with its messaging services in 1977 and rapidly became the reliable, trusted global partner for institutions worldwide we know today.
Since then, times have changed yet again. Technological advancements and cloud-based payments have opened new possibilities for cross-border payments. And, new fintechs have since emerged, making real-time international transactions possible.
Nowadays, you merely have to launch an app from your mobile phone, and with a few screen taps, money is sent and received internationally and almost instantly. Similarly, buying items from another country can be just as easy. A buyer in Indonesia or Mexico can order a handbag from a European luxury goods site and receive a real-time payment confirmation at completion.
The digitalisation of economies and trade has contributed to the growth of the global cross-border payments market, estimated by Boston Consulting Group to reach $250 trillion by 2027 – approximately 90 times the value of Apple Inc (09/21/2023).
The race against time: Legacy networks struggle to keep up
The world is seeing a proliferation of domestic real-time payment systems which appear to work instantly. We can rapidly make person-to-person payments, transfer money, and pay for goods and services with near real-time settlement.
It’s a different story for cross-border payments. Banks rely on relationships with correspondent banking partners as intermediaries to facilitate payments. And, in emerging markets, it’s common for banks to use more than one correspondent bank to facilitate an international remittance flow.
The process has multiple friction points from manual data entry, document verification and reconciliation. Human errors can result from inputting transaction details incorrectly. And, there is often operational discord when coordinating intermediaries.
Banks need to align and comply with different technology standards and regulations in order to process payments in electronic ledgers. Foreign exchange adds further cost and complexity.
The correspondent banking model has other challenges, including:
- Long waiting time and high costs. Settlement can take three days or more in underdeveloped markets due to multiple intermediaries. Each bank will charge a fee, which the customer may not know beforehand. For low-value transactions, this model may prove uneconomical.
- Limited visibility. Most banks will not have full visibility over the entire chain of correspondent banks involved in the transaction. As a result, the consumer doesn’t know the exact foreign exchange rate used or transactional fees that they will incur up-front. They are only charged the actual cost after the transaction is processed.
- Limited accessibility and lack of interoperability. Many people worldwide are unbanked and can’t access the corresponding banking system. Even if they use an alternative payment method such as a digital wallet, they may be within a closed system, unable to pay or receive funds from outside their network.
Global cross-border infrastructure
With so many different standards and infrastructures, developing an interoperable payment infrastructure is challenging. Thunes has built an interoperable network connecting consumers, banks, merchants, and digital wallets to increase payment access worldwide.
Its key components include:
- The anatomy of a network: market analysis and localisation
We start with the groundwork: analysing the local payment preferences, patterns and systems within each market where we operate. Then, we methodically select payment providers and methods in each country, covering 80% of the market’s native payment systems. Thunes aims to eliminate intermediaries from our infrastructure, establishing direct connections whenever possible.
To facilitate international payments, we connect to each in-country payment system responsible for handling our transactions. This domestic payment network can comprise a wide range of organisations, including:
- Local wallet operators
- Card schemes
- Electronic funds transfer networks
- Real-time payment networks
- And other financial institutions
Our team has developed direct relationships with local payment partners in 133 countries, expertly managing and negotiating the best possible deals along the way. Competent negotiation is a crucial aspect of our approach, enabling us to establish mutually beneficial agreements to better serve our customers.
- Harmonising technology for seamless integration
Thunes understands the importance of creating a unified and frictionless experience for our partners and customers.
We’ve ensured that our technology bridges different payment methods and protocols across each region. In many cases, this requires our software engineers to rework convoluted or poorly described application programming interfaces (APIs) to transform them into standardised interfaces. Additionally, we harmonise different protocols into a single set of APIs to relay payments between operators’ servers within a fraction of a second.
Thunes’ stack features an API integration connecting to over 300 of the world’s most popular alternative payment methods (APMs) like local digital wallets, super apps and BNPL providers.
- Adhering to local regulatory frameworks
In addition to technical alignment, adherence to regional regulatory frameworks is a crucial part of payment infrastructure. Central banks play an important role as guardians of each nation’s monetary system. Obtaining central bank approvals involves rigorous scrutiny and adherence to local regulations that can vary significantly from one country to another. Thunes maintains transparent and compliant relationships with central banks across the globe.
Our dedicated compliance team works hard to ensure that we comply with local regulations and protocols, from Anti-Money Laundering (AML) to Know Your Customer (KYC) requirements, and obtain necessary central bank approvals and licences wherever we operate.
We engage in a continual dialogue with the regulators, providing ample details on our business, technology, processes and service model. This is not a one-time effort but an ongoing relationship, nurtured to uphold the trust of the financial authorities.
By meticulously adhering to these regulatory processes, Thunes has successfully obtained central bank approvals in 70+ countries so we can operate as a reputable global payment infrastructure provider.
- Supporting diverse payment flows
A comprehensive global payment infrastructure must accommodate diverse payment flows.
Thunes supports the following cross-border examples:
- B2B (Business-to-Business): These payments occur when a business pays another business, a supplier based in another country. When these payments are immediate and issued directly, both companies can benefit, albeit in different ways. The payer can benefit from more timely procurement (if delivery is tied to payment). Liquidity and cash flow are improved for the supplier.
- P2P (Person-to-Person): People can also send international payments to another person without intermediaries. Many remittance and money transfer operators use Thunes’ API technology enabling an instant payment to be issued into a bank account or wallet, from the USA to Nigeria, for example.
- B2C (Business-to-Consumer): International business-to-consumer payments is another important use case. For example, take an international research company that surveys consumers in Southeast Asia. Each participant can be paid for his or her time directly using Thunes network. Thunes can disburse funds to an individual’s digital wallet, for example GCash in The Philippines.
- C2B (Consumer-to-Business): Thunes enables international acceptance of payments on marketplaces and eCommerce sites. Consumers can pay using their preferred payment method like a bank account or mobile wallet. Businesses using Thunes’ capabilities can then accept and settle the payment.
At Thunes, we understand that all of these payment flows have distinct characteristics and prerequisites.
For instance, B2B transactions may require additional transaction details and increased transaction limits may involve more complex invoicing or settlement processes. P2P payments often prioritise transparency of the transaction status (an indication of receipt into the payee’s account) and speed.
B2C transactions may demand secure and seamless checkout experiences, while C2B interactions can involve consumer-initiated payments and refund processes.
We aspire to offer a comprehensive payment infrastructure that extends to 80% of these payment flows in each of the 133 markets where we operate by the end of 2024.
Unlocking benefits with Thunes’ cross-border payment network
In a world that increasingly demands fast, reliable and transparent cross-border transactions, Thunes network offers its customers unique benefits:
1. Real-time convenience
Our real-time payment processing technology provides unparalleled speed and convenience, with 90% of transactions processed in real-time. This is made possible through our proprietary digital treasury engine, ensuring transactions are processed instantly, regardless of their size or complexity.
2. Robust reliability
With over a billion transactions processed to date, our network offers a trusted solution. We operate in some of the most challenging and hard-to-reach markets, and have eliminated the difficulties of managing small-ticket transactions with unreliable partners.
3. Direct connectivity
Thunes’ network is founded on strong and direct connections, which means that your cross-border payments enjoy a higher transaction success rate, streamlined issue resolution and a seamless, frictionless payment experience.
4. Unwavering transparency
Transparency is paramount for trust and customer experience in cross-border transactions. We provide real-time reporting, instant payment confirmation and enriched transaction information to ensure you and your customers always know where the money is and when it’s arrived. We also provide full visibility of the upfront costs, with rates up to 10 times less than alternatives.
5. Infinite scalability
Our network is built to scale with your business requirements. We’re continually adding new partners and payment methods to ensure our solutions are aligned with market trends and evolve our stack to meet the demand for emerging technologies.
6. Complete inclusivity
Our network is fully interoperable and optimised for local relevance. We support the most popular payment methods in each country, whether it’s bank transfers, mobile wallets, or cash transactions. We also connect to local real-time payment networks to ensure the speed of transactions, and can even build custom integrations with local payment methods.
View ahead: scalable payment partnerships for a connected world
In a world where cross-border payments are ever-evolving, it’s crucial to keep track of emerging trends and shifts in local payment cultures. Factors like real-time processing, reliability, direct connections, and transparency are reshaping the expectations of consumers and businesses worldwide. The demand for agile, scalable payment partners who can adapt to change has become increasingly evident.
Our global cross-border payments network is one our chief assets. We’ve built a unique network with the broadest range of global partners – from banks to mobile wallet providers, from card issuers to cash pick-up locations. We’ve done the heavy lifting, investing on the ground and negotiating with local brands to build connections directly, so that our customers can operate across hundreds of markets.
As we set the stage for the future, our network will keep evolving and becoming even more resilient, connecting communities, empowering entrepreneurs, and expanding financial access for all.
Learn more about our Thunes Network capabilities and local coverage.