Future of cross border payments – explained

In the past, if you wanted to send money to a friend or a business in another country, the only way to do it was through a traditional bank. But using these banks was not easy always. Sometimes it took a long time for the money to reach its destination, you didn't always know how much it would cost, and the fees could be quite high. However, because there were no other options, people had no choice but to use banks for their cross-border transactions.

Since the banks were dominating the sector they didn't have any competition, they didn't feel pressured to make improvements or come up with better solutions. So, they kept doing things the same old way without making things easier or cheaper for their customers.

Things have changed over time and now people want their money to move quickly, whether it's within their own country or across borders. They also want it to be easy to make payments using different methods like online or through apps. Plus, they want to know exactly how much it's going to cost and what the exchange rate is. On top of that, they want to be able to send money whenever they need to, without any limits. And of course, they want all of this to be cheap. Because of these demands, lots of new companies are popping up to make sending money easier, faster, and cheaper. They're trying to fix all the old problems that have been bothering people for years in the huge market for cross-border payments.

So in the fast-changing world of global finance, sending money across borders is changing a lot. Mainly due to the new technology and different things that people want.

Cross-border payments for businesses

At present days, businesses want to send money across borders quickly, easily, and with clear costs, just like they do with their regular local bank accounts. It's not just about making things easier but also about staying ahead of the competition. Companies that quickly adopt these new and improved ways of paying internationally are likely to be the first ones to do so, setting new standards for the industry.

As companies grow globally, being able to handle money transactions fast and openly between different countries becomes important for making their business bigger and keeping good connections with other businesses. This trust is key for getting better deals and building long-lasting partnerships with customers and suppliers. Companies that understand and adjust to this change early on will probably see advantages like being more flexible and having better relationships with partners around the world.

Also, more and more small and medium-sized businesses want to grow their business globally, and sending money across borders is important for this. They're doing more transactions internationally because they want to reach new customers and make their supply chains work better. This trend has been getting stronger lately.

What will cross-border payments future be like?

Because the market for sending money across borders is so big and there's a chance to shake up how things have always been done, we're seeing lots of new companies pop up, especially online banks and financial technology companies. They're focusing on certain countries or regions, different types of payments, and how much money is being sent. This has made the landscape change quickly, but it's also a bit all over the place with lots of different options out there.

While some new companies are trying to change how money is sent across borders, most are concentrating on smaller transactions between people, businesses, and other businesses. These transactions usually don't get much attention from regular banks or other traditional ways of sending money. This part of the industry is about to change a lot, especially because people in emerging markets are using mobile phones and online payment methods more, and they want to be able to send and receive money easily. This change also means more people in these markets will have access to banking services and more trade will happen with these countries.

In today's world, what people expect from services is mostly influenced by tech companies, not banks. Many mobile phone apps have set the standard for instant updates and notifications, changing what people expect from other services.

Some messaging apps let you know when your message is delivered and read right away. So, when someone goes to send money through their banking app, they expect it to happen just as quickly as sending a message like they're used to with other apps they use every day.

Businesses, whether large or small, now expect payments to happen instantly, just like individuals do. They want to be able to make payments at any time and get immediate confirmation. This helps them run their operations smoothly in a world where things happen 24/7. By delaying payments as much as possible, they can manage their money better and make their businesses grow faster. Amazon is a good example—they delay payments to suppliers but get paid by customers quickly, which gives them extra money to keep growing.

What progress can we see in cross-border payments?

Even though there are still difficulties, some regions are working together to make instant international payments happen.

New technologies like mobile tech, blockchain, APIs, AI, and cloud computing are changing how we handle payments. In places like Latin America, Africa, and Southeast Asia, there's a lot of growth happening because more young people are using digital ways to pay for things. Countries like Brazil and Mexico are seeing a big increase in people shopping online. In Africa, things are changing too, with more people using mobile money and other ways to pay for stuff. There are a lot of smartphones in Africa, even more than there are bank accounts, so it's becoming a new place where digital payments are taking off.

There's a growing demand for trustworthy and safe ways to send money across borders. Fintech companies can take advantage of this by creating special payment options that work well for these areas. This might mean making sure their systems can handle local ways of paying and making it easy to send money between different countries.