Embracing the future of cross-border payments (2024)

FAQs

What is the future of cross-border payments? ›

In recent decades, the world has witnessed a remarkable surge in cross-border payments, driven by the globalisation of trade, capital and migration flows. Global payments are expected to skyrocket from USD 190 trillion in 2023 to a staggering USD 290 trillion by 2030.

Competitive advantage.

The ability to transfer funds internationally instantly allows businesses to expand into new markets, hire global workers and build international supply chains in an incredibly streamlined way, as businesses can make payments just like they're a local enterprise.

A cross-border payment refers to any transaction in which the payer and the payee are located in different countries; these transactions can take place between individuals, companies and banking institutions.

A cross border payment is a transaction between banks, financial institutions, businesses, or individuals operating in different countries that may or may not share a border.

Also, exchange rates between different currencies and local taxes for each country are big considerations. Some of the most common cross border payment methods include bank transfers, credit card payments and alternative payment methods such as previously mentioned, eWallets and mobile payments.

Cross-Border Payments: A US$150 Trillion Catalyst

Between 2018 and 2022, the value of cross-border payments grew by over $25 trillion to reach over $150 trillion—nearly 30 times the size of the entire global technology industry in 2023.

Political and Economic Risks: Cross-border financing transactions may be affected by political instability, economic volatility, sovereign risk, and other macroeconomic factors in foreign countries, which can impact the creditworthiness of borrowers or the stability of financial markets.

Cross-border fees are determined by the card associations and charged to the card processors who are kind enough to pass those costs on to the business owner. Bottom line - as the business owner, paying the cross-border fees falls on you.

The global cross-border payments market was valued at $181.9 billion in 2022, and is projected to reach $356.5 billion by 2032, growing at a CAGR of 7.3% from 2023 to 2032. Cross-border payments market refers to financial transaction that occur between parties located in different countries.

International transactions require a change of currency, foreign transaction fees and dealing with an exchange rate. To navigate through these channels, a banking system ushers the money along. In every cross-border payment, banks and a group of varying domestic entities work together to transfer funds.

Why are cross-border payments expensive? ›

There are several reasons why cross-border payments have high costs associated with them: Correspondent Banking. All cross-border payments go through the correspondent banking network, which involves intermediary banks moving money for you. Each intermediary will be charging a fee along the way.

One of the biggest benefits of cross-border payments, especially for merchants, is access to a network of acquiring banks. Different acquirers may have varying relationships with card networks and financial institutions globally, leading to higher acceptance rates.

Also known as international payments, cross-border payments are transactions where the payer (customer) and the recipient of the transaction (merchant) are not based in the same country.

Once the transfer has been processed, the funds will usually be deducted from the sender's account. However, this doesn't necessarily mean that it will arrive with the recipient at the same time. As stated above, international bank transfers will generally arrive within one to five working days.

In 2024, several key digital payment trends are shaping the future of transactions. These trends range from advanced technologies like artificial intelligence and blockchain to the growing adoption of mobile wallets and contactless payments.

While the primary objective varies between jurisdictions, many central banks consider improved cross-border payments as a potential benefit and previous work has shown that CBDC can help overcome some of the frictions in cross-border payments.