Ola Oyetayo, CEO of Verto.

The trade industry, encompassing importers and exporters, plays a pivotal role in shaping South Africa’s GDP, exchange rate and inflation. As such, understanding the intricacies of cross-border payments is not only crucial for importers, it is vital for the economic stability and growth of the nation.

Ola Oyetayo, CEO of Verto, says despite the industry’s critical nature for the prosperity of the country, illicit dealings in South Africa's import and export sector have resulted in economic losses of as much as R100 billion annually, and R250 million every day in terms of lost tax revenue1.

“From smuggling and the misdeclaration of goods to under-invoicing to evade customs duties and taxes, these practices contribute to significant revenue losses for the government, distort market competition, and pose risks to national security and consumer safety by allowing unregulated goods into the market.”

To combat this, the South African Revenue Service (SARS) has implemented stricter customs regulations and monitoring systems, such as the advance payment notification (APN) requirement in December 2023 for import payments. Here, the regulatory change will affect import payments of R50,000 and above, requiring importers to notify SARS via eFiling before making such payments.

While this aims to improve tracking and customs efficiency, it adds complexity for importers, who might need additional support to mitigate the many challenges seen across the industry.

“Logistics and transportation issues that further complicate the process; the risk of damaged or lost goods during transit which can incur additional costs and erode trust with suppliers and customers; and the intricacies of international payment methods and associated fees are just of few of the many financial challenges that importers and exporters need to overcome to be successful,” says Oyetayo.

It is for this reason that importers and exporters should opt to partner with single-platform cross-border payment providers to enhance their competitive edge, drive business growth and contribute to economic development.

“Partnering with experts that understand the many financial complexities that importers and exports are faced with helps negotiate the many challenges,” adds Oyetayo.

Be aware of hidden fees

That said, traders are urged to do their homework as some cross-border payment solution providers have hidden costs that significantly impact importer and exporter activities. These undisclosed fees can lead to unexpected expenses, disrupting financial forecasts and eroding profit margins. For businesses engaged in international trade, these unforeseen charges complicate budgeting and may result in higher costs than initially anticipated.

“This lack of transparency not only strains cash flow, but also undermines trust in financial service providers. Consequently, importers and exporters must exercise due diligence, carefully scrutinising the terms and conditions of their payment solutions to avoid potential financial pitfalls,” explains Oyetayo.

Multi-currency challenges

Managing multi-currency transactions presents several challenges, particularly with fluctuating exchange rates. Exchange rate volatility can erode profit margins and complicate financial forecasting, making it difficult to maintain stable pricing for goods and services. Additionally, navigating different currencies involves understanding and mitigating the risks associated with currency conversion costs and potential discrepancies in value.

Streamlining payment tracking and identification

Importers and exporters encounter formidable challenges in navigating the complexities of effective payment tracking and identification, which are paramount for ensuring the precise allocation of funds and maintaining real-time visibility throughout transactions. These processes are pivotal for promptly managing delays and discrepancies that could otherwise disrupt the seamless flow of international trade.

Simplified solutions

Oyetayo emphasises that addressing these challenges involves a comprehensive approach to financial transparency and efficiency. By utilizing MT103/UER codes for payments by Verto, businesses can closely monitor each transaction's journey from initiation to completion in the recipient's bank account.

This transparency empowers importers and exporters to confidently manage their finances, ensuring all costs are transparently outlined from the outset.

“Additionally, Verto's Multi-Currency account simplifies currency management by allowing users to hold up to 49 currencies in a single wallet. Our WhatsApp Bot further facilitates easy access to real-time exchange rates directly on mobile phones,” Oyetayo added.

Through these solutions, businesses can strengthen their operational capabilities and contribute to sustainable economic development in South Africa.