The payments ecosystem stands at an inflection point.
As we look at the past, we see how far the industry has come. Cross-border payments are faster, cheaper, and more secure than ever, fueling emerging economies and connecting millions of people and businesses around the globe.
And yet, despite these advancements, cross-border payments have only scratched the surface of their potential.
The future is filled with daunting challenges, mounting competition, and thrilling opportunities—especially for businesses looking to join the cross-border conversation.
In this article, we will explore three fundamental questions:
- How have cross-border payments evolved in recent years?
- Which payments trends can we expect to see in 2024?
- What API cross-border payment solutions are available to small businesses (SMBs)?
Let’s get started.
The Story So Far: Cross-Border Payments in Review
How can we accurately assess the state of cross-border payments?
It’s a complicated question on several fronts.
For one thing, clear benchmarks are required to objectively determine success (or failure). Secondly, the cross-border ecosystem is like the known universe: it’s rapidly expanding.
Indeed, cross-border payments involve global markets, governments, currencies, digital currencies, incumbent payment providers, disrupting payment processing companies, and countless end users.
Though there are many ways to measure the market, the G20 Roadmap for Enhancing Cross-Border Payments provides the ideal perspective.
In October 2020, the G20 intergovernmental consortium outlined four targets for cross-border payments:
- Increase transaction speed.
- Reduce transaction costs.
- Promote transaction accessibility.
- Enhance transaction transparency.
By 2027, the G20 expects to see demonstrable improvements in each of these categories.
By that time, the cross-border global market could exceed $250 trillion. If that happens—and it seems quite likely to—cross-border payments will have grown nearly $100 trillion since 2017.
Nevertheless, it remains to be seen if such growth will automatically satisfy the G20 goalposts.
In his address at Harvard Law School, Under Secretary for International Affairs at the U.S. Treasury Department Jay Shambaugh admitted that “cross-border payments are too often slow, expensive, opaque, and difficult to access.”
Though he works for the federal government, Shambaugh does not expect his employer to close the gap: “no one is waiting for the U.S. Government to solve the problems. There is presently a wealth of innovation that will change the payments landscape.”
Indeed, the private sector is playing a vital role in the evolution of cross-border payments.
In fact, the rise of application programming interface (API) harmonization has already changed the game.
By delivering turnkey solutions and extending functionality, API integrations are allowing businesses to seamlessly enter the world of real-time cross-border payments solutions.
The result? Diversified revenue streams for businesses and reduced costs for clients.
Better yet, these API solutions allow businesses to not only access global payment networks, but also shield them from worrying about precarious compliance laws, volatile FX conversions, demanding AML checks, and more.
Still, this is only one part of the payments trends picture. While cross-border payments as a service are a significant development, five other trends are taking shape as we approach 2024.
Payments Trend #1: New Players
Once upon a time, global payments were managed by a tight-knit coterie of banks.
Those days are long gone, especially as new payment methods and payment processing companies take center stage.
Neo banks, fintechs, payment service providers (PSPs), and other non-traditional players are seizing large swathes of the industry.
While employing cutting-edge technology, many of these competitors are utilizing punchy marketing and social media campaigns to put a fresh spin on a timeless need.
It’s working both in the U.S. and around the world.
The evidence is found in an unexpected place: mobile app stores, where neobank downloads outpace traditional banks in Europe.
As Silvio Peruci, Managing Director of App Radar puts it, “even though legacy banks may still have a larger general market share than neobanks, the gap is decreasing and competition is increasing.”
According to Citigroup, over 40% of traditional banks have lost 5% of the market to fintechs—and they expect to relinquish another 5% in the coming decade.
Alternative players are putting significant pressure on the core business models of international card networks and traditional banks.
In order to remain competitive, companies will either need to create their own digital infrastructure or leverage established APIs that support fast, affordable, and secure payments.
Payments Trend #2: Disruptive Technology
In 2024, disruption is the name of the game.
Market innovation has accelerated the adoption of advanced tech like distributed ledger technology (DLT), Central Bank Digital Currencies (CBDCs), cloud platforms, and even artificial intelligence (AI) and machine learning.
Though many of these tools aren’t exactly new, they will soon become ubiquitous across the payments ecosystem.
For example, CBDCs were little more than a rumor just a few years ago.
Today, however, 130 countries—roughly 98% of global GDP—are actively exploring their own digital currency. By 2030, CBDCs could drive over $213 billion in annual cross-border payments.
Of course, most CBDCs are supported by distributed ledger technologies (DLT), which have also pervaded the payments universe.
While networks like SWIFT (Society for Worldwide Interbank Financial Telecommunication) have formally embraced DLT, enthusiasm for the infrastructure is quickly spreading elsewhere.
In May 2023, the Federal Reserve Bank of New York and the Monetary Authority of Singapore (MAS) released a joint report expressing interest in using DLT to facilitate cross-border payments.
The landscape is changing, and fast.
While facilitating international transactions, some of these disruptors—like artificial intelligence—can also deliver meaningful defense protocols.
Payments Trend #3: Enhanced Security
Cybercriminals have set their sights on cross-border payments.
Online fraud has been a major problem since 2016, when the Federal Reserve Bank of New York almost paid $951 million to criminals who hacked Bangladesh’s central bank.
Since then, bad actors have leveraged countless schemes to breach payment networks, steal credentials, and plunder financial resources.
According to a report by the Federal Trade Commission (FTC), 11% of all fraud complaints were related to cross-border payments in 2022—up from just 1% in 1992.
While 11% may not sound especially alarming, that amounts to roughly 264,000 cases of cross-border fraud in a single year.
Nevertheless, it’s the trends that worry financial analysts, especially as digital currencies become more prominent in the global economy.
In fact, Lloyd’s of London recently estimated that an attack on a payments system could lead to global losses of $3.5 trillion. The United States alone would suffer losses in excess of $1.1 trillion.
That’s why the Bank for International Systems (BIS) is actively developing a seven-point plan to prevent cyberattacks on CBDCs, and why many firms are including blockchain and AI in their security frameworks.
After all, AI has the power to automate data reconciliation, to quickly detect anomalies, and to flag suspicious payments before they authenticate.
While AI technology is available for firms of all sizes, major companies are building proprietary tools to defend their clients. For example, J.P. Morgan and Starbucks recently collaborated to develop an advanced AI watchdog system to monitor their own cross-border payments.
As we head into 2024, security will become a paramount factor—especially for newer firms entering the competitive realm of cross-border payments.
Payments Trend #4: Digital Wallet Dominance
While the G20 provided four targets for cross-border payments, they had one goal in mind:
to promote financial inclusion around the world.
Digital wallets are integral to that mission.
After all, they help put banking in the hands of people who need it most, wherever they live.
Indeed, there are over 2.6 billion digital wallet users in Asia and over 621 million in Africa.
Digital wallets are proliferating on a global level.
In fact, while total penetration was roughly 50% in 2020, it’s expected to reach 75% by 2025, when the majority of all e-commerce transactions will be completed with a mobile wallet.
Digital wallets make cross-border payments fast, affordable, and reliable. They’re also replacing paper-based systems and cementing our cashless society.
Though consumers are leading the charge, many businesses may soon incorporate digital wallets for B2B payments.
While this trend is well underway in the United States, it’s also developing in places like Kenya, Ghana, and Tanzania, where many merchants utilize digital-wallet infrastructure.
By 2028, the B2B digital payment market will be worth $8.2 billion. Digital wallets could play a leading role in this expansion.
Payments Trend #5: SMBs in the Spotlight
Small and medium-sized businesses (SMBs) have more optionality than ever.
Major banks once had a monopoly on cross-border payments, but that’s not the case anymore. Today, SMBs can confidently center the market with significant upside potential.
By integrating custom API solutions, SMBs can enjoy faster access to data, less interaction with intermediaries, and seamless execution of FX payments.
In other words, the future of cross-border payments will empower SMBs to pay and get paid quickly—without taxing their time or bottom line.
After all, SMBs are no longer confined to their local zip codes. They’re global, and they need cross-border payment solutions that allow them to scale internationally, should they want to.
According to a Mastercard study, 80% of SMBs say that third-party cross-border payment solutions helped them improve their cash flow.
Just imagine what they could accomplish with a comprehensive API solution.
UniTeller: The Gateway to Cross-Border Payments
At UniTeller, we deliver comprehensive and competitive cross-border payment solutions.
With our end-to-end API solution, you can establish powerful new revenue streams while enhancing your firm’s presence at home and abroad.
Serving over 80 countries with payouts at over 200,000 paying locations and over 70 currencies, UniTeller unlocks real-time access to one of the most competitive payment networks in the world.
In fact, we work with over 100 remittance companies, corporations, banks, payers, and retailers across the United States, Canada, Latin America, Europe, Africa, and Asia.
By partnering with UniTeller, you’ll gain total access to this network—and you can leverage it in real-time for P2P, B2C, C2B, and B2B transactions.
Whether you need robust turnkey solutions or niche integrations, we’ll tailor our platform to your unique needs.
We look into AML compliance checks, transaction screenings, and FX conversions. Plus, we’re licensed across all states in the United States but more regions in the pipeline.
Your state-of-the-art payment experience is here with UniTeller Cross-Border Send.
