The State of Cross-Border Payments & Alternative Payment Methods

The world of finance and payments has witnessed a dramatic transformation in recent years, with fintech playing a pivotal role in reshaping cross-border payments. Consequently, it is now easier than ever to move money across the world and expand businesses into new markets. Fintech innovations have not only made international transactions faster and more convenient but have also introduced new players and technologies to the payments landscape. How? These solutions are finding efficient ways to move money and are working to overcome historical cross-border payment issues such as inefficient processes, time-to-settle, high costs, and overall complexity. 

In 2023, the number of digital shoppers stands at 2.64 billion, which continues to rise with internet penetration, growing access to financial services, and improving rates of digital literacy. With the growing number of online shoppers and increasing demands around optimising shopping experiences at a global scale, we’ve delved into the reasons behind rising alternative payments, and the current state of cross-border payments. Unlimit’s Head of Business Growth (Europe), Atis Ivanovs shares his knowledge from years of expertise on the ground with businesses across multiple countries. 

What stimulated the rise of digital and alternative payments?

Globalisation is the cause of rising digital and alternative payments (APMs). For example, a recent study showed that in the UK cash use has shrunk to 1% of all payments while card payments make up more than half of all payments at 51%, alternative payment methods make up 41%, and bank transfers account for 7%. This representation of the market shows the sheer speed of adoption, but let’s look at why this is happening overall. Particularly with APMs, their popularity stems from their association with physical money, protecting customers from the apprehensions of new payment methods by using technologies that enhance and facilitate a better synergy between cash and e-payment solutions. 

Additionally, businesses are expanding from their local regions, and moving across borders which now calls for digital and alternative payment methods to avoid the elongated and complex processes that have put cross-border payment corridors under immense strain. Eager to avoid these issues, merchants are still seeking routes for expansion, but with innovative technologies and by accepting APMs -illustrated through a recent EY survey revealing more than 85% of merchants plan to accept new APMs in the next one to three years. 

Previously we had seen businesses relying solely on card processing, before the rapid globalisation and expansion of online e-commerce. For instance, we have clients who began their business journey in the UK, and with the help of Unlimit expanded to Europe with our payment processing solution, and are progressing across new continents with their goods and services. How? They could achieve this by offering our global solution of APMs at a local level in new markets, tailoring our services to create the right solution uniquely for their business, to best meet the needs and wants of the market they are entering. Instead, people want e-payment solutions and payment services that cater to the changing buying habits of the wider population – taking into consideration levels of digital access, paying 24/7 and anywhere in the world, options for banked/unbanked populations, and consumer habits. 

What are the biggest challenges in making cross-border payments? 

It is much harder to navigate across and through borders because of numerous factors, including different currencies, varying time zones, foreign exchange rates, financial infrastructure complexities, and policies. Because of that, a cross-border transaction can cost up to 10% of the value of a transfer and cost up to 10 times more than a domestic payment. But the great thing is the expertise of payment service providers, like Unlimit, create a simplified, cost-effective, and convenient solution that amalgamates each APM so that businesses can simply approach a single provider for a one-stop solution. Unlimit takes the payment labour away from businesses and minimises challenges through our API integration which is available at a global scale.

Cross-border transactions are still not seamless. But, we can see fintech solutions creating convenience and simplicity to cross-border payment corridors so that businesses can step into any country and have access to a myriad of currencies and card brands for their customers. Another element of cross-border transactions is security concerns, money taking several days to reach its destination, and breaches of data protection that expose personal information. However, regulated organisations, including Unlimit, remain abreast of rules and regulations to protect businesses and their customers from risk. In essence, cross-border payments can be difficult to navigate, but not with a payment provider like Unlimit which thrives in navigating challenges and strives to create easier, borderless payments for businesses. 

How is Unlimit solving those issues?

With our global presence and infrastructure! Businesses rely on Unlimit to solve issues they face with laboured payment processes, additional costs, numerous third parties, and friction in accessing new markets. With our single integration platform, businesses are given the tools and expertise to expand across borders with high approval ratios, direct integrations, and 1000+ payment methods all in one API solution. The application programming interface (API) allows businesses to effortlessly integrate our fintech services into their business, so they can accept and make payments through 1000+ payment methods to global customers. We have a local presence in Latin America, Asia-Pacific including India, Africa, and Europe, including the UK. We take the time to study each market independently, learning about how people shop, what/who they trust, spending habits, preferred methods of payment, e-commerce trends, challenges merchants face, and more. With this knowledge, we provide businesses with access to a global footprint and one of the most comprehensive suites of payment methods through one platform to suit every business type.

Moreover, we have used our years of expertise on the ground to build valuable connections at both local and regional levels in each country. This means that businesses who partner with us can launch to market quicker with our reputable presence and decade-strong expert knowledge. These elements help Unlimit’s partners make seamless, borderless payments with ease whilst minimising cost and boosting opportunities for increasing revenue.

In terms of customer experience and acquisition, what is important for a business to consider locally and globally?

It is human relationships first and foremost. As a business, whether you are providing goods or services, you must know your client, build good relationships, and then build the products and services on top of that reputation. This way businesses can tailor their customer experience to the needs of each market they hold a presence in, no matter where it is in the world. Also, it is important to keep communication open with the payment service provider you choose to be with. At Unlimit, we go above and beyond to share our learnings with businesses so that they can prepare their business for future trends, and have the tools and support to continue spanning across new borders. It is important for any business to consider that to be a global success, you must take the time to work with a local approach and not paint every country with the same brush i.e. tailor your business, communications, payments, promotions, etc. to every local market you enter. Businesses should build a brand of trust and a positive reputation, where clients know they can rely on you for their specific needs, secure payments, tailored product offerings, and more. So, take the time to know your client, understand their needs, and offer specific solutions that they require. 

How difficult is it to accept payments globally?

There are numerous factors to consider when accepting payments, and that’s why businesses partner with fintech providers who tackle many of the considerations at a global scale. For example, businesses would need to consider the varying compliances/regulations, payment methods, security measures, user experience, costs, and fees. Without an experienced and transparent payment service provider, the process can be difficult to navigate and costly to create a presence in multiple markets.

The reason why so many businesses are choosing Unlimit is that we do the heavy lifting to make businesses feel like they can expand to new markets with ease – as though the world is ‘borderless’. Our decades of experience and presence in numerous local markets make global payments easy, as we take care of the finer details and leave business leaders to focus on their core strategy, with the confidence that we will help them to go ‘borderless’ with payments.

Want to learn more about the state of cross-border payments, and how your business can span into new international markets? Our latest whitepaper unlocks insights into cross-border payments – global obstacles, local solutions, and innovations to broaden international payment corridors. Informed by our experts with over 20+ years of experience, find out how to avoid the same mistakes of businesses entering new markets. Download it here today.