Cross-border Payments: A Positive Future.

Cross-border payments have streamlined transactions. And for SaaS models, this positive turn to fintech couldn’t have come at a better time.

Fintech advancements has empowered businesses to make payments across countries.

What used to take a myriad of microtransactions can be done within hours and minutes. As the invoice is generated and the payment accepted, the deal is almost immediately completed with no to little lag time. Cross-border payments have opened a world of financial possibilities for organizations and paved the way for international trade

It has made payments cost-efficient. As the SaaS market grows by a CAGR of 18.4%, B2B cross-border payment will become vital. The potential for this market is vast.

But how vast exactly?

A global workforce and global organizational collaboration facilitate a need for cross-border payments.

After the pandemic, the world saw a monumental shift in the way we worked. Marketing, sales, product teams, and operations changed. We had to collaborate remotely.

But, it also helped organizations understand the importance of a global workforce and collaborating with organizations in different countries.

But how would an organization pay or receive money? Using cross-border payment solutions.

What is Cross-border payments?

Cross-border payments are the transfer of funds and assets across international borders. The transfer is facilitated by banking institutions or fintech organizations. These cross-border transactions involve currency conversions.

Methods of Cross-border payments

• Bank Transfers
• International Wire Transfers
• Electronic Funds Transfer
• Online Payments Platform
• Cryptocurrencies

More methods like credit cards and checks are used, but for this piece, we’ll touch on the idea instead of going deeper. We have a great blog that elaborates more on the concept!

These global payments helped the world streamline their transactions. Yet, it posed a challenge.

The banks took time to verify international transactions, and there is a complex process that takes time. And let us not forget the conversion fees. The entire process took valuable time and money out of the pockets of organizations.

But now, there are innovative solution. Payment service providers like Paypal, Razorpay, Stripe, Wise, and more enabled organizations to pay invoices quickly and at cost, helping them make their payments efficiently and in due time.

The emergence of new solutions and global collaboration brings a positive change.

According to allied market research, the global cross-border payments market was valued at 181.9$bn in 2022 and is projected to reach 356.5$bn by 2032 with a CAGR of 7.3%

As you can see, the cross-border payments market is growing positively. Owing to its fairly new technological innovations there is room for rapid growth in this nascent technological landscape.

Although- fintech development has made it possible for low costs and helped organizations sustain their subscriptions overseas. These solutions don’t support all countries as complex compliances, the upheaval of changing currency values, and the inherent risks of cybersecurity attacks create uncertainty.

The promise of emerging solutions and the challenges that come with it plague the market.

Businesses are looking for solutions that will streamline the entire global payment system and bring unified economic growth.

Market Potential

Let us bring our attention to this report:

It is an exceptional piece. There are two “assets” that could be interesting to this discussion.

This quote by Pawel Szejko, CFO of XTB

“It’s easier to build something for a few countries than to build the infrastructure and the setup for the whole world”.

And that RTPs are expected to generate $173bn in additional economic output by 2026.

Essentially- the cross-border payment service infrastructure is siloed right now and presents a significant opportunity- Any solution that tackles it— will have a piece of the $173bn.

The Future

The cross-border payments market offers complex challenges and rewards. The two essential pieces in the broad fintech puzzle are: –

1.    RTP (Real-time payments)

2.    The blockchain

It is essential for any organization entering the market to understand the state of the two, especially blockchain. It presents a unique opportunity, although one shrouded in uncertainty. While blockchain will bring trust and clarity to the international transactions, the complexity and energy needed to run blockchains on a massive global scale are not yet present.

Even setting it up can cost an enterprise millions of dollars.

The future of this global payment method is this: It is headed in the right direction, and it needs innovation. There is still the looming threat of cybersecurity. And disconnected solutions, although the best available choices today, leave something to desire.

Organizations entering this market will find that there are many problems to solve. The question is: how will they solve them in a way that builds and improves upon the rest?

The solution which answers this question will eventually have a large piece of the market share.

Cross-border payments market size brings a promise.

The promise is global collaboration and a secure financial backbone for the entire world.

The entire globe is now operating as a singular international business. Contractors called freelancers play a vital role in changing the shape of a business. From strategies to marketing experts, the globe is filled with talented individuals. And business to business, business to customer or direct to customer or any kind is now looking to hire these talents.

Companies know that these individuals with diverse backgrounds will increase market share.

As independent contractors rise and provide their knowledge for organizational growth, the ease of these international payments will become increasingly crucial.

Whether it’s B2B payments, B2C or customer to business, these cross-border payment systems must improve the customer experience by providing real-time transfers in a secure way.

For SaaS, this will enable the growth of individual markets by helping them penetrate new borders and geographies that would have otherwise remained untouched because of currency exchange costs.

Fintech, Artificial Intelligence and the use of digital currency like blockchain promise a new future. A safe and secure way of moving money. However, new solutions that tackle these problems may take time to emerge.

They will not be able to tackle traditional banking institutions but will empower them for a better consumer experience.