Raynor de Best
Content expert covering payments and (crypto)currencies
Cross-border payments - statistics & facts
Cross-border payment transactions increasingly became a focus for consumers and businesses during and after the coronavirus pandemic, but how big is this market? Figures for this topic are estimates, as international payments are difficult to track. Nevertheless, in 2023 the market size of B2B cross-border payments outweighs the payments initiated by consumers. The latter, however, is forecast to grow the fastest between 2023 and 2030. A 2022 survey that asked banks and fintech companies how they ranked the demand for payment improvements within their client base echoes a similar sentiment. Nearly three out of 10 respondents ranked cross-border efficiency as a pain point when paying. Banks acknowledged the need for more modern cross-border payments and listed several reasons in 2023 why they considered accomplishing that.
Most banks claimed a desire to reduce expenses and expand into new areas. As the main reasons for banks to modernize international transactions, a desire to produce more income and enhance underlying procedures was closely followed.
International money movement has become a big focus topic in 2023 as it touches international trade, cross-border e-commerce, even economic activity. The industry hopes to grow, but how does it aim to do that?
International money movement has become a big focus topic in 2023 as it touches international trade, cross-border e-commerce, even economic activity. The industry hopes to grow, but how does it aim to do that?
The search for international interoperability and de-fragmentation
Cross-border transactions face several challenges mainly stemming from the fragmentation between national standardization that the payments industry seeks to solve in order to promote future growth. All of them touch on the fragmentation observed between countries. Supply chain professionals, for example, listed differences in regulatory compliance at customs as a significant challenge. Such differences can also translate into different payment habits or different payment systems used, which may or may not work well together from one country to the next. Technological barriers or limited access to technology can also complicate digital cross-border transactions. The share of the population without access to bank accounts, for example, varies significantly across the world. Finally, variable foreign exchange rates are an additional factor of uncertainty for either sender or receiver, especially considering the long transaction times typically associated with international money transfers.New technologies are a potential way to improve
Financial service providers increasingly look towards technology to help overcome the hurdles in cross-border payments. Application Programming Interfaces or APIs enable the use of automated data calls and real-time responses. APIs can also be modular, meaning development time might be relatively small. Nevertheless, payment system operators reported a lack of consistency across jurisdictions for API implementation. Central bank digital currencies or CBDC are another way of improving cross-border payments. Central banks from multiple countries work together to create a shared digital currency to help optimize clearing and financial settlements between those countries. Examples of such interbank wholesale CBDCs include Inthanon-LionRock between Thailand and Hong Kong or Project Aber between Saudi Arabia and the UAE. Most central banks, however, believed cross-border payments were but one of many reasons to develop a CBDC.
