From a payments perspective, what challenges do multinational companies face when paying for employees’ travel or corporate expenses abroad?

Great question! This is a problem that a lot of companies in the financial space are trying to address, each in their own unique manner.

First and foremost, it depends from where (Country) you are trying to make the payment from (payment source). Some countries may have restrictions on sending cross-border payments, most do not. You would need to check that first.

Second, in which countries (markets) are you trying to dispense payments out. If you are lucky enough, a global bank may be covering all the countries in question. Practically speaking, this is rare. You would be very lucky to find a bank in all the locations the MNC works in. This is especially true of developing countries.

In any case, the Forex component will come into play (there is no avoidance on that). The whole issue now is how to streamline the entire process to that

(a) You get the best Forex rates for your global payments (based on your volume and value, MNCs can surely luck out here).
(b) You have to deal with a singular entity to make all the payments. This is the not so easy part.

If there is one thing the MNCs hate, it is to deal with multitude of payment providers to dispense payments in various geographic regions. This is a paperwork and management nightmare for most. Not to mention each provider will have to go through a vendor on-boarding process (which itself is a tedious process).

There are Forex companies who specialise in such global payouts, but there is an inherent issue that most of the developing countries might not be covered, so they will be making the payments via a correspondent bank, hence another payment provider is inserted into the payment layer. This essentially translate to a higher payout fees. The lesser the layers, the more economical it is for you to do a payout.

MNCs would ideally prefer a single point of contact for their payments. They would also have to ensure that the payment provider in question is duly licensed and complaint in all the regions they operate in. Most global payment providers would by-pass the regulatory issue by simply hopping onto the SWIFT Payment network and pushing the payments out to end employees local accounts (via a correspondent bank). Whilst you would still have a singular contact point to deal with, you will have payment variances as far as the forex rate is concerned.

You could try to find a company that has fostered localised banking arrangements with all parties (read Banks) in the geographic regions you operate in.

Here essentially you have three choices:

(a) Western Union / MoneyGram / RIA type money transfer operators (MTOs). The transactions costs would be higher, but you would have to check, most countries will not allow MTOs to do inward commercial payments. That is if WU/MG/RIA decide to do commercial transactions with you.

(b) You can issue pre-paid debit cards in the markets you operate in. Almost every country, be it first world or developing, nowadays has a Visa/Mastercard presence. You can make arrangement to load these cards directly. In this manner, your forex rate would be determined by the acquiring network, but it would still be economical and speedy.

If say the MNC is in UK and dispatches prepaid debit cards to all its employees, the payment are being made in GBP, but the payouts will be made as per the payout bank's arrangement with Visa/Mastercard network and the acquiring bank will come into play. Could be costly.

(c) Try to find a payment provider that has localised presence in each country, where they can do a direct deposit into accounts, and save on the interchange fees of a cross-border money transfer. I have yet to find such a company, but this would be the most beneficial. Even better would be then to provide each employee in each country with a locally issued Visa/Mastercard debit card (a task which will require you to have a solid relationship with issuing banks in each country).

Reporting and collection of data of the payouts would be another challenge. Very few providers would be able to provide a uniform, reporting structure as per the MNC's requirement.

Another challenge is interconnect. Large MNCs would like their payrolls for their 1000s of employees to be automated. If your provider cannot handle automation, this would require some form of an interface between their system and yours for a seamless transaction execution process.

AML and KYC would also be challenges. You might have to conform to specific reporting in certain countries when the payouts are being done, and for your payouts you would most definitely have to report the same to your local financial regulator. Needless to say, your provider has to be licensed to do this and should take the onus of the AML/KYC ops.

Tax Deductions and Filing. In some countries for payouts, you may need to do mandatory tax deduction at source and file the same information with the tax authorities. Who will file this and do this on the MNC's behalf? What about the tax rebate that might be applicable back to you? How is that handled.

Thorough understanding of the markets. Most MNCs Billing and Payments Departments are cognisant to the rules & regulations of payments and payment systems in their geographic region only. Understanding and deploying a global solution would require understanding and working knowledge of the payments ecosystem in each territory, which very few global payment providers themselves understand.

These are the main issues in my opinion that MNCs would be facing.