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In previous writings, FinFan has addressed B2B cross-border payments, especially in import and export payments, and the intricate issues entailed in the procedural aspects of transactions between import-export enterprises.

Additionally, a critical stage prone to errors and fraudulent activities during these transactions is the issuance of B2B cross-border payment invoices.

In B2C and C2B payment transactions, where cross-border bill payments occur most frequently, what exactly happens? Let's explore this issue with FinFan.

What are cross-border bill payments?

To understand the concept of cross-border bill payments, we need to clarify the concept of the two components that make up it: cross-border payments and bill payments.

What are cross-border payments?

The term "cross-border payments" or "x-border payments" is frequently utilized by FinFan in our writings to denote financial transactions conducted from individuals or entities in one country, using their native currency (e.g., USD for the United States), to individuals or entities in another country employing a different currency (e.g., VND for Vietnam), with various purposes and behaviors.

What are bill payments?

Bill payment is the act of paying for services, subscription packages, products, etc., that individuals or organizations have an obligation to make to other individuals or organizations that provide solutions for their requests.

A practical example of bill payments is that every month we have to pay living expenses such as electricity, water, rent, etc.; buy premium packages of streaming services like YouTube, Netflix, etc.; or simply top up our monthly electricity bill through e-wallet services.

What are cross-border bill payments?

Therefore, when merging the concepts of cross-border payment and bill payments, we define cross-border bill payments as transactions, predominantly from individuals (though occasionally from organizations) to other individuals (or entities) abroad, aimed at fulfilling specific needs, usually encompassing the currency exchange process between one country and another.

Some popular fields on cross-border bill payments

Here are the 3 most popular fields on cross-border bill payments:

Remittance

• In Vietnam market

As observed in several previous articles across FinFan's platforms, the amount of remittance to Vietnam has experienced significant growth each year, even amidst periods of economic downturn due to factors such as epidemics or conflicts like the tensions between Russia and Ukraine, starting from 2019 onwards.

Notably, in 2023, the amount of money pouring into Ho Chi Minh City from remittances reached 3 times that of FDI capital to Vietnam. That happened due to information about the real estate ownership bill for overseas Vietnamese from the government.

Read more:

. Remittances to Vietnam reached over 600 billion VND just during the Tet

. Vietnam Remittance Record and Story

• Global market

According to updated data from the World Bank, in 2023, remittance flows to low- and middle-income countries (LMICs) are estimated to have reached $669 billion, an increase of 3.8% over the same period of the year 2022.

By region, remittance inflows grew for Latin America and the Caribbean (8%), South Asia (7.2%), East Asia and the Pacific (3%), and Sub-Saharan Africa (1.9%). Flows to the Middle East and North Africa fell for the second year, declining by 5.3% mainly due to a sharp drop in flows to Egypt. Remittances to Europe and Central Asia also fell by 1.4% after gaining more than 18% in 2022.

The United States continued to be the largest source of remittances. The top five remittance recipient countries in 2023 are:

. India ($125 billion),

. Mexico ($67 billion),

. China ($50 billion),

. the Philippines ($40 billion),

. Egypt ($24 billion).

Economies, where remittance inflows represent substantial shares of gross domestic product (GDP) – highlighting the importance of remittances for funding current account and fiscal shortfalls, are:

. Tajikistan (48%),

. Tonga (41%),

. Samoa (32%),

. Lebanon (28%),

. Nicaragua (27%).

Source: World Bank

With the proliferation of technology-driven advancements in remittance alongside the notable growth of technology infrastructure in various countries in recent years, the remittance sector, embracing technology, has consistently been one of the focal points for many enabling fintech service companies.

Among them, FinFan stands out with our e-wallet aggregator solution, leveraging data insights along with technological innovations to facilitate seamless transactions.

E-commerce Payments

This is also quite a potential market for fintech companies to participate in to create payment solutions for e-commerce sites or online marketplaces.

According to the last report from Jupiter Research, the market size of global e-commerce payments in 2023 was 5.3 trillion USD and could reach 8 trillion USD in 2027 with a growth of 51.4% compared with 2023.

Subscription or Advertising Payments

This is also a highly promising area for fintech companies to explore, especially considering the trend where technological applications for various industries (such as design, video, and image editing) or presentation software are all aiming to expand their customer base globally.

As of FinFan's last update in January 2022, Netflix had over 200 million subscribers globally, this number has been growing really fast, especially when COVID-19 was in the most stressful period worldwide from 2020-2022.

When it comes to advertising, most of the revenue for social media channels comes from advertisements, and they are constantly seeking to enhance their payment gateways to further optimize the final steps in conducting advertising for products or services posted by suppliers on their platforms.

And so, we have traversed the concept of cross-border bill payments. Still, many inquiries from businesses reach FinFan, questioning: "Is there a distinction between cross-border invoice payment and cross-border bill payment?" Here is FinFan's response.

Differences between cross-border bill payments and cross-border invoice payments

In fact, the concepts of bill and invoice share a commonality: they both serve as documents notifying you of the items you are about to pay for regarding products or services that you have previously purchased, subscribed to, or ordered. They are typically sent from the supplier to the recipient.

Another term frequently used in the payment industry is a receipt, which signifies that the service provider or seller has received payment from the recipient of the product or service.

However, this occurs when the payment process is completed, and the buyer has paid all the corresponding fees agreed upon between the two parties.

Returning to the distinction between cross-border invoice payments and cross-border bill payments, after providing services, FinFan establishes a connection between businesses involved in international payments with domestic banks and e-wallets through our e-wallet aggregator system.

FinFan has identified the difference between these two forms of documents as follows:

Details about the product or service

FinFan can assert that the majority of *cross-border B2C, C2B, and C2C* or P2P payment transactions often involve cross-border bill payments because, in such cases, the bill recipient typically consists of end customers who may not necessarily require extensive documentation or information to reconcile with anyone else.

Therefore, all that is needed is for the supplier of the product or service to provide sufficient information regarding the quantity and price of the goods or services, which would suffice to complete the transaction.

In contrast, in transactions between businesses, a substantial amount of information about the products and services provided by the counterpart is often required.

For instance, details such as the origin and source of the product, specifics of the services to be rendered, or more specific information regarding the transaction agreements between the two parties, etc., are necessary.

These pieces of information enable businesses to verify thoroughly, cross-reference with accompanying documentation, and potentially reconcile with various regulatory bodies such as customs, tax authorities, banks, etc.

This ensures the completion of procedures for receiving the goods or services involved. Therefore, in this situation, they need the suppliers or service providers to provide cross-border payment invoices.

Payment terms and conditions

For cross-border bill payments, you simply need to click on the payment button, or, before the transaction concludes.

For example, when you finish your meal in an abroad restaurant or purchase something on the marketplace, you'll promptly receive a bill reminding you to complete the final step of payment.

On the other hand, in the case of transactions between businesses, both parties must agree on the transaction transfer time and completion, which should be clearly stated on the payment invoice.

This documentation serves as evidence for both the exporting and importing bank's verification during the cross-border import and export invoice payment process which FinFan discussed in our post on LinkedIn below:

Not to mention, the conditions regarding payment between the two parties, such as how deposits are placed and how payments are finalized, are also detailed in the cross-border import and export invoices between the two business entities. Another situation, in some cases, invoices can also be sent ahead of time to preemptively pay for goods and services, which you may see often in service-based industries.

Is cross-border bill payment safe?

Issues that FinFan wants partners to commit to are payment security and control of user information.

FinFan always chooses very carefully reputable partners that can ensure information authentication issues related to KYC and AML along with issues with information security principles in cyberspace, including:

* Encryption for payment security

Encryption is the process of transforming information into a complex and difficult-to-decipher sequence of characters without sufficient knowledge of the algorithm used. Encryption enables the secure and confidential transmission of information.

• Encryption and the Encryption Process

• Original Text (Algorithm) Encrypted Text

• Decryption Encrypted Text (Algorithm) Original Text

There are various encryption methods available, and the choice of encryption method depends on specific circumstances and requirements. Some common encryption methods in e-commerce include Public Key Encryption and Symmetric Key Encryption.

Payment Security through SSL Protocol

The Secure Socket Layer (SSL) is a security model for payment channels, widely developed and applied in e-commerce today.

Through SSL, information is encrypted, transmitted, and authenticated between the server and the customer's connecting device via the TCP/IP link, ensuring data integrity. The SSL protocol is designed to thwart attempts to falsify information during the transmission process between applications over the Internet.

HTTPS Protocol

Hypertext Transfer Protocol Secure (HTTPS) is an upgraded version of the Hypertext Transfer Protocol (HTTP), designed to ensure security through authentication, public key encryption, and digital signatures.

HTTPS allows e-commerce websites to securely conduct transactions through encryption procedures between the server and the customer's device. This technology seamlessly enhances HTTP with optimal security capabilities through another defense mechanism.

Secure Electronic Transaction (SET) Standard

The components involved in secure electronic transactions are:

• Cardholder

• Internet

• Merchant

• Payment gateway

• Card payment bank

• Payment network

• Card-issuing bank

• Payment license provider

The Secure Electronic Transaction (SET) standard is jointly issued by MasterCard and VISA to ensure security and confidentiality for individuals and organizations participating in electronic payments to conduct online transactions. SET provides standards and transaction processing procedures such as:

• Cardholder and merchant authentication

• Payment data security

• Definition of electronic security service providers and protocols

Compliance with Payment Card Data Security Standard (PCI DSS)

The Payment Card Data Security Council was established in 2006 to define standards for organizations involved in accepting, processing, storing, and transmitting credit card information to ensure a secure transaction environment.

PCI DSS is not a law, but a security standard developed and jointly issued by major global card organizations such as VISA, Mastercard, JCB, AMEX, and Discover. Non-compliant entities may face regulatory fines, pay card replacement fees, undergo audits and bear brand damage.

Pillars of Payment Card Data Security Standard:

• Secure network: maintain a firewall to protect customer data.

• Data security: encrypting and protect customer information during transmission.

• Risk management: ensure system safety by identifying and addressing potential risks.

• Access management: restrict access to cardholder data.

• Monitoring: regularly monitor networks and track system resource access.

• Maintenance: maintain security policies.

Secure Login Screen

E-commerce transactions begin with the system login screen. Therefore, the design of an e-commerce website needs to pay special attention to the login screen. Designing a secure login screen is a simple task but can significantly minimize the risk of being attacked by hackers and accessing information.

Electronic Signatures

Electronic signatures identify customer identity. Electronic signatures are essentially a method of encrypting information using the unique characteristics of customers, used for transaction authentication.

Information (Private key) Signature (Public key)

Once established, the relationship between transaction data and the signature is unique and cannot be replaced by any component. Even in the event of a component replacement, the system will automatically recognize an invalid signature. In summary, electronic signatures are effective tools for transaction authorization and information security. *

*Source: CyStack

Why must FinFan choose and cooperate with partners that meet the above issues?

The above standards are not only applicable to the e-commerce model but also all other payment models as they can support end-to-end security in the payment process.

When partners ensure security principles and information authentication as mentioned above, the cross-border bill payment process is nearly safeguarded in the safest manner possible.

If a business fails to meet the above criteria, the payment process becomes vulnerable to attacks, potentially resulting in significant damages aimed at personal gain by malicious actors.

Some typical cross-border bill payment fraud cases

Here are some real-life examples of cross-border bill payment fraud:

Business Email Compromise (BEC) Scams:

Fraudsters compromise email accounts of businesses involved in cross-border transactions.

They intercept legitimate payment requests and change the bank account information to divert funds to their accounts.

Unsuspecting companies then make payments to the fraudulent accounts, resulting in financial losses.

Fake Supplier Fraud:

Scammers set up fake companies posing as legitimate suppliers in cross-border transactions.

They provide false bills and payment instructions to buyers, convincing them to transfer funds for goods or services that are never delivered.

Once the payment is made, the fraudulent suppliers disappear, leaving the buyers with financial losses.

Man-in-the-Middle Attacks:

In these attacks, hackers intercept communication between parties involved in cross-border transactions.

They may alter payment instructions, manipulate account details, or redirect funds to fraudulent accounts.

This type of fraud often involves sophisticated techniques to compromise secure channels of communication.

Payment Diversion Fraud:

Fraudsters infiltrate the supply chain of businesses engaged in cross-border transactions.

They impersonate legitimate vendors or employees and request changes to payment instructions.

Unsuspecting buyers then send payments to fraudulent accounts controlled by the scammers, resulting in financial losses.

These are just a few examples of the types of fraud schemes that can occur in cross-border bill payments.

Here is some information about cross-border bill payments researched and written by the FinFan team.

If you have any questions or need advice on connecting businesses related to or unrelated to payments with payment partners domestically such as banks and e-wallets (via FinFan's e-wallet aggregator system), please feel free to reach out.

In case you have any inquiries or require guidance on business partnership services or issues related to payments with domestic or international partners, the FinFan team is ready to assist you. We can provide detailed information and advice on payment solutions, and business partnership processes to support you in connecting with payment partners that suit your needs.

Please contact us through the contact channels provided on the FinFan website or via email/phone call for detailed assistance. We are always ready to listen to and help you with any requests and needs related to the field of payments and international business.

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 already integrated with almost the world's well-known MTOs, PSPs, switch and core fintech platforms 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

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