Travelex built a company-to-company payment system, GEO Global Clearing Network, that takes advantage of local clearing systems in 71 countries, including 31 European Economic Area countries, to make payments cheaper and more efficient. Travelex says replacing checks with the network's e-payments reduces traditional payment costs by an average 350% to 950%.
Travelex treasurer Fran Berndt says the company realized moving beyond its correspondent network of global clearing banks to establish relationships with local banks and take advantage of local payment and clearing systems would achieve cost and operational efficiencies.
So the provider of foreign exchange and international payments set up relationships with the most suitable bank or group of banks in each country. Taking advantage of local clearing systems let Travelex lower clearing costs and better serve international as well as local customers. In Poland, for example, companies typically have multiple bank accounts for different currencies, so Travelex set up accounts at the same banks to enable cross-currency payments in the same day.
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The GEO Network manages more than 130 currencies and allows foreign companies to pay in the domestic currency. A smart router aims to complete payments as quickly as possible. Sometimes that means using host-to-host connectivity, where Travelex releases payment files directly to the local bank, or Travelex may upload files to the bank's system or a secure Website from which the bank can download them.
"Finding the best means of connecting was challenging because we wanted to do it in the most efficient way possible," Berndt says, adding another challenge was setting up local bank relationships given different time zones.
Corporate customers won't have to face those challenges because Travelex has done it for them. Companies can make payments overseas simply by placing the files into the GEO payment engine. "So they don't have to maintain bank accounts internationally," Berndt says.
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