How Have Cross-border Payments Transformed the Global Business Landscape?

20 Feb
2024

 
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Highlights:

  • Introduction
  • A ray on the rising need of cross-border payments
  • Efficient and trustworthy methods of cross-border transactions
  • Recent acquisitions made by leading players in the domain

Rapid globalization, digitalization, and the rise of e-commerce platforms have transformed consumer preferences for shopping worldwide. This further helps merchants to get opportunities to enter new markets and access new customer bases. However, to expand their business across different countries, merchants must adapt the global commerce strategy to local markets to provide flexible payment options to customers in different regions. This has given birth to the concept of cross-border payments. Cross-border payments refer to financial transactions where the payer and the recipient are in different countries. These payments involve transactions between individuals, companies, or banks. Emphasizing faster, cheaper, and more transparent payment options across borders can support economic growth, financial inclusion, global trade, and developments among various countries.

Factors that are promoting the demand for cross-border payments

The rapidly changing consumer preferences are one of the emerging factors that have increased the demand for a better global international payments system. Consumers are looking for as efficient and safe cross-border payment services as domestic payment services. They are also expecting these payment services to be fast, reliable, and intuitive. The increasing penetration of smartphones and the growing popularity of digital access points help consumers to opt for alternative payment methods. Alternative payment solutions that provide cheaper, faster, and more reliable payment solutions can gain a competitive advantage over banks.

Another important factor is the increasing trade among emerging markets. Nowadays, several developing economies are focusing on cross-border trade to expand their global footprint. For instance, the markets belonging to Africa, Latin America, and Asia have actively started participating in international trade. Global cross-border trade is mainly stimulated by various initiatives taken by leading economies such as the African Continental Free Trade Area and the Belt and Road Initiative by China.

Furthermore, the increasing accessibility of smartphones and the surging popularity of e-payment solutions such as mobile wallets or e-wallets have shown significant growth in international payments. Tremendously increasing e-commerce platforms have made consumers shop from global stores and explore new products and accessories. With the convenience of using smartphones, consumers are willing to pay through instant payment solutions, accessing banking services with a finger touch.

What popular methods of cross-border payments are reshaping the financial ecosystem?

International transactions are more complex than transferring funds at a domestic level. Multiple banks are usually involved in transferring funds from one country to another. However, these processes consume a significant amount at each payment gateway. Moreover, exchange rates among different countries and local taxes are the other big concerns to transfer funds globally.

Some of the most common methods of making cross-border payments include bank transfers, credit card payments, and alternative methods such as mobile payments, and e-wallets. Bank transfers are simple cross-border transactions that include a few steps such as having bank accounts at respective banks between whom the transactions need to be made. These transactions between banks involve a payment message to debit a certain amount from Bank A and credit it to Bank B. Not all banks need to have a direct relationship, in such cases, the transaction is made by an intermediary or a correspondent banking network. As banks offer a safe and secure transfer of money, the bank transfer segment is expected to lead the trail by garnering a revenue of $55.48 billion during 2022-2032.

Favorable acquisitions reshaping the cross-border payments sector in 2024

The cross-border payments industry is experiencing prominent growth due to the rising e-commerce transactions made by consumers across the globe. To foster competitiveness, many leading players in this domain have made promising alliances, partnerships, and acquisitions. For instance, in February 2024, Nukkleus, a leading fintech company announced its acquisition of Mercury Global, a leading cross-border payments firm. With this acquisition, Nukkleus aimed to strengthen its global position and strengthen its service offerings by ensuring greater efficiency, security, and inclusivity across the financial infrastructure.

Another instance is the acquisition of Global Reach Group, a UK-based cross-border payments provider by FLEETCOR Technologies, Inc., a renowned global business payments company. This acquisition would help FLEETCOR to gain its position as a non-banking B2B global cross-border payments provider across the UK, EU, and Canada.

To conclude, the increasing globalization and international trade can propel the domain with huge opportunities in the coming epoch. Moreover, the growing expansion of online retail platforms will act as the key reason for the tremendous growth of the sector in the future.

To stay ahead of the trends and identify emerging opportunities in the cross-border payments industry, feel free to talk to our analysts today! They can also help support business decisions and attract new investors.

 
Rosy Behera

Rosy Behera

Author's Bio- Rosy Behera holds a bachelor’s degree in Electrical and Electronics Engineering and now she is a content writer by profession. She loves to portray her thoughts and ideas with a nice command of words. Grabbing an audience with her creative write-ups is one of her biggest assets so far. Apart from writing, she is a certified “Odisi” dancer and has done Gardharva in Drawing, Painting, and Arts. She always explores new things through travel and is a big foodie.

 
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