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Unlocking new revenue streams: opportunities in cross-border payment services for financial institutions

How to make the most of the cross-border payment opportunity.

Cross-border payments are on the up and up, driven by the globalization of labor and supply chains and digitisation of commerce. Global cross-border payments are expected to increase from $190 trillion in 2023 to a massive $290 trillion by 2030, according to one study.

However, all is not well in cross-border payment land. International transfers often take too long and cost too much, certainly when compared to domestic transfers. What’s more, it’s not always clear where the funds are and when they’ll arrive either.

That being said, the way people and businesses move money cross-border is changing. The development of new real-time banking rails and new networks is creating new opportunities in cross-border payment services for financial institutions. But at the same time, disintermediation threats from fintechs, Big Tech and global brands.

We examine and size up various cross-border payment use cases, consider the benefits and drawbacks, plus how to realize the opportunities.

New rails, new networks, new opportunities

There are now more than 70 domestic, instant or real-time payment systems around the world. Overall global instant payment transactions volumes grew 63% in 2022 to reach a new high of 195 billion transactions, according to a 2023 report.

By 2027, real-time payments are expected to account for 27% of all electronic payments globally, up from 18% in 2022. This will be a mix of new volumes and existing payment volumes displaced from slower, less efficient methods, such as debit and credit cards, batch ACH and cash.

It’s not about the same old payments done faster. Or necessarily new payments infrastructure for new payment infrastructure’s sake. Rather, it’s about how businesses can utilize new payment rails and networks to create new value-added products and services for customers.

Cross-border payment use cases and sizing

Opportunities for better, faster cross-border payments exist in consumer-to-consumer, consumer-to-business, business-to-business and business-to-consumer sectors as follows:

Consumer-to-consumer (C2C)

Helping consumers move money across national borders in real time is principally about remittances, where migrant workers send money home. Or account-to-account transfers where consumers move money between their own accounts in different countries.

Remittances to low- and middle-income countries grew an estimated 3.8% in 2023 to nearly $670 billion, according to the World Bank. Remittance costs remain persistently high, costing 6.2% on average to send $200 in Q2 2023.

Banks continue to be the costliest channel for sending remittances (with an average cost of 12.1%), followed by post offices (7%), money transfer operators (5.3%) and mobile operators (4.1%). So, there’s a real opportunity for new entrants to add value with a faster, cheaper remittance offering to more countries.

Consumer-to-business (C2B)

Capitalizing on the C2B cross-border flow opportunities includes facilitating e-commerce and marketplacepurchases from consumers. But also, iGaming pay-ins, investments via trading platforms, charitable donations and in-person travel and tourism spend when consumers visit foreign countries.

E-commerce marketplaces are on course to become the largest as well as the fast-growing B2C retail channel globally. By 2027, B2C marketplace sales, where funds flow from consumers to businesses, will account for 58% of e-commerce sales, up from 56% in 2022. B2B marketplace growth could well eclipse this.

Meanwhile, the global iGaming industry will be worth nearly $184 billion by 2032, an increase of over 85% from the estimated $63.5 billion in 2023. The size of the global digital investments market is expected to reach$3.3 trillion by 2027, and the NGO and charitable sector $330 billion in 2024, growing to $410 billion in 2028. Significant flows in these areas mean significant opportunities for cross-border propositions.

Business-to-business (B2B)

Helping businesses pay workers and clients in real time includes everything from payouts to gig workers, freelancers and payroll for salaried employees. Employers can also offer earned wage access schemes to let employees draw down on their forthcoming pay packet in advance.

World Bank data shows that the global gig economy accounts for 12% of the global labor market, generating revenue in the trillions of dollars. Meanwhile, $9.5 billion in wages were accessed early in the US in 2020, up from $3.2 billion in 2018.

Other B2B cross-border use cases include e-commerce marketplaces paying sellers, card acquirers paying merchants, and lending platforms paying borrowers. Again, speed is only one aspect of the proposition for these cross-border opportunities.

Business-to-consumer (B2C)

Making cross-border payments to customers gives them fast, secure access to refunds, insurance claims, gaming and lottery wins, dividends and interest payments and more. Also scope to process government payouts, such as salaries to international employees or social benefits.

Cross-border disbursements great and small represent a sizeable opportunity for financial institutions.

Benefits of cross-border payments

The main advantages of cross-border payments to financial institutions are:

  • Increase revenue – diversifying into cross-border payments allows financial institutions to earn incremental revenue from new customers in new countries and payment corridors.
  • Cut costs – some cross-border payments can be more cost-effective than traditional SWIFT transfers, allowing financial institutions to save on transaction, FX and other fees.
  • Improve business – expanding the offer to international markets helps reduce reliance on domestic markets, diversify and future-proof business.

Drawbacks of cross-border payments

The main disadvantages of cross-border payments to financial institutions are:

  • Operational inefficiencies – the more payment methods supported, the more time, resources and budget required to manage and maintain them.
  • Cost – it’s not always possible to know up front how much cross-border payments will cost, plus rates can vary depending on the sending and receiving currency, provider and other factors.
  • Regulation – KYC/AML and sanction-screening requirements differ from country to country and change frequently, which can be confusing and time-consuming to navigate.

Characteristics of a good cross-border payment solution

Cross-border payments must be as fast, simple and efficient as local bank transfers. They must be flexible, allowing single or recurring payments, plus a choice of connection methods: API, SWIFT, File Upload or customized by API.

Any cross-border payment solution must also be cost-efficient, with fee known up front and payments arriving in full without deductions. And last but not least, transfers must comply with all regulations and be safe, with advanced screening, real-time monitoring and online payment tracking.

How Inpay can help

 Inpay’s proprietary network of global financial institutions makes its quicker, safer and more cost-effetive to send money internationally compared to SWIFT wire transfers, money service businesses and cash couriers.

Since 2008, Inpay has helped financial institutions, iGaming operators, NGOs and others move money to the right places quickly, easily and securely. Our network covers 200+ countries and gives real-time access to 36 countries via our instant SEPA solution, as well as to the UK with GBP and other local payment offerings.

Our smart technology, innovative products, robust compliance and 200 in-house experts from 45+ countries deliver industry-leading transaction success rates. Regulated by the Danish FSA, Inpay has been recognised as Denmark’s fastest-growing company, and Europe’s fastest-growing fintech.

Contact us at [email protected] to find out how we could help you accelerate your business growth.

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