How cross-border payments are evolving in the digital economy Latest trends, technological advancements and partnerships

Cross-border payments are important to the global economy because they help international trade and investment and enable us to process financial transactions with each other. Traditional methods of making cross-border payments have been criticized for their inefficiencies, high costs, and slow processing times. However, recent years have seen a significant revolution in the cross-border payments sector. These changes are driven by technological advancements, regulatory changes, and increasing demand for seamless and affordable solutions.

1. The evolving landscape of cross-border payments

Cross-border fund transfers have traditionally been associated with issues including high fees, slow processing, lack of transparency, and risk of fraud. These issues impact businesses involved in global trade and make it difficult for people in developing countries to access financial services. However, governments and regulators around the world are recognizing the need for a modernized cross-border payments infrastructure. Initiatives such as the Financial Action Task Force (FATF) Directive and the European Union Payment Services Directive (PSD2) aim to address these issues and improve the security, transparency and efficiency of international transactions.

For example, the European Union Payment Services Directive (PSD2) sets out rules to improve payment services in the EU and make them more competitive and secure. These initiatives encourage countries and financial institutions to modernize their systems, adopt new technologies such as blockchain, and explore innovations such as central bank digital currencies (CBDCs). The goal is therefore to create a faster, cheaper and more secure cross-border payments infrastructure that benefits both businesses and individuals, especially in developing countries.

According to a new report published by Allied Market Research, Global cross-border payment sector is expected to grow to CAGR 7.3% from 2023 to 2032.

2. Increase in e-commerce promotes growth of cross-border payment industry

The growth of e-commerce has transformed the business environment, especially cross-border payments. The widespread use of digital technology and the Internet has given consumers access to online shopping platforms. The spread of smartphones and high-speed internet has enabled users to explore, compare, and purchase products without geographic restrictions. Additionally, fintech companies play an important role in transforming the cross-border payments industry in e-commerce. We increase the overall satisfaction of our global customers by providing innovative solutions such as instant currency exchange, secure payment platforms, and simplified checkout processes. Therefore, with the increase in e-commerce transactions, there is a need for a cross-border payments sector.

3. Recent trends in changes in the overseas payment sector

The cross-border payments industry is undergoing notable change for the following reasons: Advances in technology, changes in regulations, and evolving customer needs. Numerous trends are changing important parts of the global financial system and affecting the way businesses and individuals transfer funds across borders. Some of the recent trends shaping the cross-border payments sector include:

3.1 Digitalization and development of financial technology

Advances in digital technology and the rise of fintech companies have transformed cross-border payments. These companies use cutting-edge technologies such as blockchain and artificial intelligence to provide faster, more cost-effective and efficient payment solutions. These developments challenge traditional banking by improving transparency, reducing transaction costs, and providing a seamless user experience.

3.2 Blockchain and cryptocurrency

Blockchain technology, which is the basis for digital currencies such as Bitcoin and Ethereum, is attracting attention in the field of cross-border payments. Blockchain reduces the need for intermediaries and accelerates cross-border payments by ensuring secure, transparent, and decentralized transactions. Cryptocurrencies also offer the possibility of faster and cheaper transactions, which is advantageous for global businesses operating in regions with less developed banking systems.

Huobi China CEO Yuan Yuming Highlighting the potential of blockchain We are working to address global trade issues at the Global Blockchain Policy Forum. He emphasized its role in reducing information asymmetry, increasing transparency and reducing costs.

3.3 Changes in regulations

Governments and regulators are transforming the global cross-border payments landscape to improve safety and promote competition. Programs such as the Single Euro Payments Area (SEPA) in Europe and the Faster Payments Service (FPS) in the UK aim to standardize and accelerate cross-border transactions. Additionally, regulations such as Europe’s revised Payment Services Directive (PSD2) promote innovation and competition by enforcing enhanced security protocols and encouraging the participation of third-party providers.

3.4 Real-time payments

The growing demand for real-time payments is based on the need for immediate and continuous transactions. Traditional international payment methods are often subject to delays due to batch processing and time zone changes. With the help of technological advancements and regulatory changes, real-time payment systems enable rapid fund transfers and provide greater flexibility and efficiency for businesses and consumers.

3.5 Enhanced security measures

As financial transactions become more digital, securing cross-border payments has become essential. Advanced authentication methods, biometrics, and encryption technologies are used to protect sensitive financial information and prevent fraud. Additionally, regulatory frameworks are being adjusted to address new cybersecurity challenges and protect users in the cross-border payments ecosystem.

3.6 Financial Inclusion Initiative

Advances in cross-border payments are influenced by efforts to increase financial inclusion globally. The main objectives of these initiatives are to provide banking services to people who do not have or have limited access to banking services and to facilitate cross-border transactions for individuals who were previously unable to use traditional financial systems. This is achieved through the implementation of advanced technologies.

4 Latest trends in cross-border payments

4.1 FV Bank introduces innovative cross-border FX payments with USDC integration.

Last year, FV Bank, a leading US digital bank, unveiled cross-border FX payment services for its global account holders. We offer competitive exchange rates for smooth international transactions with 7 currency options and coverage in over 150 countries. CEO Miles Paschini emphasizes efficiency and cost savings. In particular, customers in the digital asset sector can benefit from USDC direct deposit and fast currency conversion.

4.2 XTransfer and Deutsche Bank have joined forces to provide cross-border payment services in Thailand.

In February 2024, XTransfer, a Chinese B2B cross-border trade payment platform, and Deutsche Bank, a leading financial services provider, achieved an important milestone in their partnership in Thailand. In accordance with the Bank of Thailand’s NRQC rules, XTransfer can now collect local payments from Thai buyers for export companies. With the help of Deutsche Bank, Thai baht payments are converted to Hong Kong dollars and Chinese renminbi before being transferred to XTransfer’s international accounts, simplifying cross-border transactions.

Deutsche Bank helped XTransfer achieve NRQC qualification, providing benefits such as higher THB limits and faster FX settlement times. This collaboration strengthens XTransfer’s ability to support customers in the Thai market and highlights Deutsche Bank’s commitment to promoting business in Thailand. This partnership is expected to enable more international companies to expand their operations in Thailand.

4.3. YES Bank and LeRemitt Bring Seamless Cross-Border Transactions to Small and Medium Businesses

On February 7, 2024, fintech startup LeRemitt launched a cross-border platform in collaboration with Yes Bank. The platform facilitates international transactions for small and medium-sized enterprises (MSMEs) in major currencies including US dollar and Euro.

“We are pleased to announce the launch of our cross-border platform in collaboration with YES Bank. This partnership demonstrates our commitment to empowering small and medium-sized enterprises (SMEs) by providing seamless, effective and affordable international payment solutions,” said Sheetal Jain, co-founder and CEO of LeRemitt.

In 2022, Jain, Mahesh Kumar Barate, and Hari Ambati founded LeRemitt as a platform for cross-border remittances. Its main role is to support small and medium-sized enterprises (SMEs) in sending and receiving payments and provide many other services. LeRemitt also aims to expand its range of services to cover various aspects of global trade and strengthen its reputation as a provider of comprehensive solutions for small and medium-sized businesses operating globally.

5. Key developments from frontrunners

Some players in the cross-border payments sector are focusing on implementing various strategies such as partnerships, new product launches, legal agreements, and joint ventures to strengthen their position in the industry.

For example, in September 2023, YES Bank announced the launch of a cross-border payment system. YES Bank and BriskPe have joined forces to produce BriskPe A2A, a range of solutions designed specifically for importers and exporters. BriskPe customers can receive payments in more than 180 countries and 36 foreign currencies through this platform. According to YES Bank, funds can be transferred and converted into Indian Rupees within one business day and then deposited directly into the recipient’s bank account in India. The main goal of this partnership is to facilitate rapid cross-border payments, especially for small and medium-sized enterprises (SMEs) operating in the manufacturing and services sectors.

Meanwhile, Zepz’s remittance company Sendwave introduced a neobanking solution targeting immigrants in the United States. Sendwave Pay, a digital platform for money transfer services in East and West Africa, was acquired by Zepz in 2020, along with money transfer company WorldRemit.

In summary, the global cross-border payments sector plays an important role in facilitating international financial transactions. As technology advances, the industry is constantly evolving to provide effective, reliable and affordable ways to transfer funds across borders. Additionally, several industry players are actively contributing to the transformation of the cross-border payments infrastructure by implementing various strategies and providing a more comprehensive, secure, and seamless platform for both businesses and individuals.

Writer: Hashada Dive | Editor: Rakhi Shah
About the author
A qualified computer engineer, Harshada Dive brings her passion for writing to her role as Associate Content Writer at Allied Market Research. With expertise in creating engaging content, she specializes in cutting-edge topics and provides insightful perspectives on various industry developments.

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