" class="no-js "lang="en-US"> EXCLUSIVE: 'Masterstrokes" - Stephen Grainger, Mastercard in 'The Fintech Magazine'
Wednesday, February 08, 2023
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EXCLUSIVE: ‘Masterstrokes” – Stephen Grainger, Mastercard in ‘The Fintech Magazine’

As head of Mastercard Cross-Border Services, Stephen Grainger is aware that banks struggle to meet the evermore specific needs of individual business customers. But a re-purposed payments network can…

For many SMEs, the fact that cross-border payments networks kept running during the worst of the pandemic was a lifeline. Nearly three-quarters of the 3,000 surveyed for Mastercard’s 2022 Borderless Payments Report, said they’d been forced to look abroad as their traditional domestic markets and supply chains dried up – and their businesses often benefitted as a result.

But while Mastercard found 58 per cent of SMEs are making use of cross-border payment networks more than they were three years ago, that’s not to say it’s easy.

Thirty-nine per cent complained that the current state of cross-border payments slows down their supply chain; 36 per cent wanted more transparency on how much money they were losing to FX and transfer costs; while a quarter said off-shore suppliers had refused to work with them because of uncertainty over when a payment would hit their bank. Countless studies point to international trade being a stimulus for business growth. Most recently, InterTradeIreland’s Business Monitor survey (Q2 2022) revealed that SMEs that export are twice as likely to experience strong growth as those that do not.

But in August, the World Economic Forum said SMEs are ‘in urgent need of digital infrastructure, training and processes’ if they are to take advantage of the global opportunity, and urged governments to simplify tax and customs procedures to help them. It echoed concerns already expressed by the G20 group of nations. In 2020, the G20 signalled they would address payment issues specifically, including transparency, cost, speed and access to cross-border rails.

The group set targets for their payment providers to deliver improvements by the end of 2027, including clear, up-front information on transaction costs and the time taken to deliver funds.Stephen Grainger, an executive vice president at Mastercard, welcomes the intervention by national and supra-national bodies, because SMEs’ 149cross-border trading problems aren’t in the gift of one industry to solve.

“While we’re striving for cheaper, better and faster, cross-border payments [compared to domestic payments] involve a lot more work,” he says. “You’re effectively moving money from one domestic scheme into another, with all the regulation and rules wrapped around that. Accountablility for making those improvements happen exists at the exit point from a scheme and arises at the entry point.

“It needs more investment in technology and in people, who can help facilitate and foster the delivery of the solutions that their customers require”

“It also manifests on the person – the individual, the group, the fintech, the financial institution or whoever – who’s managing it in the middle. “The removal of some of the frictions – be it around financial crime compliance, provisioning of tax services, FX, etc – requires real change.”

That said, Grainger believes, banks in particular can help ease the pain for SMES, and provide the most appropriate service for their specific cross-border payment use case – be that paying international suppliers, sending earnings to global workers or paying salaries to overseas recipients. And, in his opinion, the most effective way for them to do that is by working with a third party.

“We’re working with organisations to help speed up the delivery of those payments [and] provide more certainty,” says Grainger, referring to Mastercard Cross-Border Services. Described as ‘one connection to reach the world’, it leverages the extensive Mastercard network to enable payments directly to bank accounts, mobile wallets, cards and cash payout locations in 100-plus markets (more than 40 of them in real time) and in 60 currencies. Importantly, it addresses many of the pain points identified by the G20, giving guaranteed and predictable settlement times, transparent and predictable foreign exchange rates and fees, and end-to-end visibility of the transaction’s status.

“Ultimately, in this space, you need to provide certainty and predictability,” says Grainger. “If I’m an SME that’s invoiced somebody and I’m running on tight margins/cash flow, I want to know the invoice is going to get paid in a timely manner and for funds to hit my account at a certain point.

“That’s not unrealistic, but quite often funds don’t move with the same speed and transparency as they do in domestic schemes. The other challenge is being clear about what is going to land in that account. If I’ve invoiced you for £12,000, I don’t want £11,980. It’s not difficult; it’s a very simple, baseline expectation.’So why is it beyond many financial institutions ability to meet it?

“The very simple answer is that it needs more investment in technology and in people, who can help facilitate and foster the delivery of the solutions their customers require, alongside the traditional services such as loans,” says Grainger. “And that’s hard to achieve.”

Mastercard Cross-Border Services is an example of the company’s strategy to offer – often institutional – partners easy-to-access, multi-purpose products and channels that they night struggle to provide alone.


Mastercard has moved a long way from its traditional card business; its products now extend to account-to-account, identity, cyber security and more. That’s been inspired, says Grainger, by the emergence of ‘use case’ fintechs that are competing in discrete areas of banking. For the first time, SMEs have a choice of providers that may provide a more optimal solution for their requirements at a specific point of need.

Fi-nancial Institutions are often not equipped to compete with this, he says, because, in the first instance they’re often focussed on risk and lending rather than payments.

He explains: “They underwrite risk, they lend money, and payments are often a thing that gets tacked on to the end of it. ‘So, the experience is not – and has never been – the foundation of what drives the provisioning of a payment service to a small or a large business.

“Now, you are starting to see the emergence of this use case environment. “Before, the only people who ever enabled a payment were the same people who lent the money to a merchant to pay its supplier. “That link is being broken, which is great if you’re a business, because you’ll start to see the frictionless consumer experiences that exist transition into the corporate and SME space.”

Mastercard Cross-Border Services is just one way to help banks retain business customers who might otherwise be persuaded to look elsewhere. But the strategy is not limited to payments. “Our customers can reuse that integrated channel [with Mastercard] for other purposes,” says Grainger.

Mastercard is leveraging the power of the network to move the industry forward. In the Nordic markets it’s working with partners in the P27 Nordic Payment Flow initiative to deliver fast, multi-currency account-to-account payments, including real-time and batch payments. And in March 2022 it announced a B2B payment solution for the UK market – Mastercard Track Card-to-Account Transfer – which allows businesses to use their commercial card programme to make payments to any supplier, regardless of whether that supplier accepts card payments or not.

The aim of the initiative – which was first adopted by HSBC – is to help businesses manage cash flow, eliminate manual work and expand payment options as suppliers receive card payments from buyers directly into their bank account. Mastercard issuers will be able to offer the solution to their corporate and business customers, many of whom, during the pandemic, saw the average time large companies took to pay suppliers increase to more than 37 days, while the share of invoices paid later than 60 days hit a four-year high. All these initiatives share the same intent, says Grainger: a laser focus on the use case.

“How do you service a very specific need? Are there different technologies to solve the problem you want to address? That’s the direction the payments industry is heading in – focusing on specific use cases and needs, and maximising new technologies to be able to do so.”


This article was published in The Fintech Magazine Issue 25, Page 148-149

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