Why More Connectivity Means More Vulnerability for Cross-Border Payments

Today’s interconnected world is, well, increasingly connected. Fundamentally, that means it relies on trust.

In the contemporary era dominated by digital payments and financial innovation, advances and threats alike are not isolated but interdependent. The complex reality of digital payments innovation can in some ways amplify the potential for systemic vulnerabilities that can erode that trust.

Within the payments landscape alone, credit risk, payment risk, counterparty risk, fraud, security risk and compliance risk are among five of the biggest threats to maintaining trust.

“All of them keep me up at night,” Akbar Hussain, co-founder and general counsel at TerraPay, told PYMNTS during a discussion for the series “What’s Next in Payments.”

“Each [risk vector] acts on the other. It’s like if someone has a terrible accident in a swimming pool, it doesn’t affect the neighbor’s swimming pool. But if the neighbor has a COVID infection, it affects everyone,” Hussain said, stressing that as payment ecosystems grow increasingly complex, no risks exist in isolation.

A failure in one area — be it compliance or technology — can cascade and create far-reaching consequences. This dynamic necessitates a proactive approach to risk management, where the focus shifts from merely reacting to anticipating and mitigating potential threats.

Regulatory scrutiny is intensifying as governments and agencies worldwide introduce new requirements to combat money laundering, tax evasion and illicit financing.

But Hussain emphasized that compliance isn’t just about adhering to regulations, but also about enhancing trust and fidelity within the payment ecosystem.

“It’s not what you preach; it’s what you tolerate. And what is not tolerated is to act in a way that would be the financial equivalent of selling cars without seatbelts. It’s against everyone’s safety,” he said, underscoring his own company’s zero-tolerance stance on lapses that could undermine safety or trust.

This cultural ethos is reinforced by having compliance leadership embedded at the highest levels of decision-making.

For TerraPay, Hussain said, culture and compliance are not afterthoughts; they are integral to the company’s DNA. He pointed out that TerraPay’s commitment to regulatory rigor has been a strategic choice, enabling the company to operate in diverse, high-risk markets while maintaining customer trust.

A foundational aspect of TerraPay’s own mission is to address financial exclusion, particularly in underserved markets. Hussain rejected the term “low-value transactions,” instead referring to them as “high-impact” due to their significance in improving lives — whether for school fees, medical expenses or small business operations.

By focusing on these high-impact transactions, it has been possible to test and refine compliance models in real-world, high-volume scenarios. For TerraPay, this has yielded not only operational efficiencies but also invaluable insights into fostering inclusivity within a traditionally exclusionary financial system.

While technology holds immense promise in addressing fraud and enhancing operational efficiency, Hussain cautioned against overreliance on “silver bullet” solutions like artificial intelligence (AI). Instead, TerraPay adopts an incremental, data-driven approach to technology integration. By running experiments on anonymized data, the company fine-tunes its systems to balance scalability with accuracy.

For instance, leveraging AI to reduce false positives in fraud detection has not only streamlined operations but also driven down per-transaction costs — a critical factor in promoting financial inclusion. “Trust but verify” remains the guiding principle, ensuring that new technologies meet rigorous standards before deployment.

As non-traditional players increasingly enter the financial services space, the landscape of trust is evolving. Hussain highlighted TerraPay’s work with the Wallet Interoperability Council as a step toward creating a more seamless and inclusive digital payments ecosystem.

“I can send you a text message whether you’re on a plane, in Greenland, or hiking. That technology exists. But when it comes to attaching value and sending it over, we run into issues,” he said, acknowledging that achieving ubiquity requires more than just technological innovation — it demands cultural, behavioral and regulatory shifts.

The path forward lies in constant vigilance and adaptation.

“Trust is like hygiene — you’ve got to work on it every day,” Hussain said, emphasizing that institutional trust is built incrementally, through both visible advancements and behind-the-scenes improvements.

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