The rise of international remote work has put a strain on traditional payment providers. Venture-backed startup Routefusion aims to disrupt the international payments space by making cross border transactions faster, less expensive, and more simple.
The worldwide COVID-19 pandemic has caused a surge in remote work, with offices closed, many employees are taking advantage of the down travel market, to live and work in a new home-base. As many of these workers are relocating they’re not only leaving behind the traditional workplace but also leaving behind their native countries. This increased mobility has driven demand for a faster solution than what traditional payment systems can offer.
The $5.3 billion acquisition of Plaid by Visa and high valuations for financial and commerce infrastructure services earlier this year may have has piqued the interest of investors in banking infrastructure tech solutions. Many financial companies, including many in the insurance and investment industries, still rely on time-consuming, manual, paper-based processes, representing a huge automation opportunity for API-based solutions.
The growth and adoption of the digital business have simplified doing business internationally and made it more attractive than a decade ago. However, despite recent changes, payment solutions have not kept pace with the new ways that people work. Due to a multitude of regulatory reasons, financial institutions are not quick to change and adopt new technologies, even if this means sacrificing customer needs.
Now international marketplace payments and the gig economy fueling much of the growth in cross-border transactions, are serving as the impetus for an expansion of international payments capabilities. Routefusion, an Austin-based company hopes to emerge as the leader of a category that’s experiencing an increasing level of focus.
“Currently, cross border transactions involve a team of 100+ people to build out technology and partner relationships. That’s why, prior to Routefusion, there wasn’t a one-stop solution for cross border payments,” says Colton Seal, CEO, and co-founder of Routefusion. “We’re doing for cross border payments what Stripe did for credit card payments.”
Today’s cross-border ecosystem involves many different players, from banks to FX brokers to funds-transfer service companies. Each party in this complicated service chain has its own rules, delays, and upcharges. Routefusion has aggregated several major institutional payment providers like AFEX, Cambridge, MoneyCorp, Bank of America, and Barclays, on its platform. Now with one single-integration, customers gain access to over 10 different international payment rails, while managing only one vendor.
While consumer-facing competitors Transferwise and Payoneer have entered the B2B payments space, Routefusion is the first company to tackle this problem exclusively for B2B payments. The company aims to automate much of the manual back-and-forth banking processes through centralized APIs and in the process, speed up the transaction process and save end users money.
With a focus on satisfying regulatory and compliance needs, Routrfusion has removed what previously stood as barriers to the adoption of similar solutions. It has streamlined the KYC and AML process, letting users submit documentation one time, to one place, instead of providing it to every international payments provider they work with. The company also addresses another barrier, exchange rates. It brings together several international liquidity providers, enabling users to access wholesale exchange rates they previously could not leverage.
Routefusion has been attractive enough to garner a seed round investment from several well-known investors William Hockey, co-founder of bank API company Plaid, and venture capital funds Silverton, Initialized, NextWorld Ventures, and Acceleprise.
The lingering question is will it work? The market for international payment API routing is still unproven, but with the stage set for new solutions to fuel the financial needs of commerce and the new ways of working. With a new generation that values mobility and experience progressing through the ranks in the global workforce, international commerce and global remote work are not likely to slow down anytime soon, as the pandemic has shown companies that a mobile workforce can be productive.