Beyond Borders: The State of Cross-border Payments Roundtable

In today’s interconnected global economy, businesses are eager to reap the benefits of global growth sooner rather than later. The ability to engage in cross-border commerce is now a crucial component of success, allowing businesses to not just survive but thrive in different regions. Underpinning that expansion is the efficiency and effectiveness of cross-border payments. While the current state of cross-border processes leaves room for improvement, a range of emerging technologies and the enhancement of existing international channels are transforming our global interactions.

Unlimit’s latest roundtable discussion continues its mission to remove borders in international payments. The conversation brings together experts across several regions to discuss the present and future of payments globally. The Unlimit experts on our roundtable are William Ip, Head of APAC; Jovi Overo, Managing Director of Unlimit BaaS; Ignacio Morales, Head of Mexico; Lucio Vargas, Head of Brazil; and Trevor Goott, Director of Africa and India. 

The Roundtable Dissected

Our guests bring decades of business and payments experience to the discussion, which range from trends to challenges in the cross-border payment space.

Each of our contributors discusses the factors that are driving the current state of payments, and influential factors that are shaping the cross-border capabilities for businesses to engage in global e-commerce. Each of our experts delves into the importance for businesses to understand that the variations in available technologies and differing regulatory frameworks in each region are essential as they impact their operations. 

Our experts concurred that success in cross-border markets requires not only a regional focus but also a more granular approach by dividing these regions into smaller segments. This strategy fosters tailored solutions, aiding businesses to prosper in dynamic markets. Furthermore, the Unlimit team explores beyond primary cross-border payment concerns, delving into open banking, trust in payments, merchant flexibility in payment methods, and comparing fintech with traditional banking.

What are cross-border payments?

Cross-border payments are commercial financial transactions between a sender and recipient based in separate countries. The transactions can occur between B2B, B2C, and C2C, covering both wholesale and retail payments that can include remittances. Notorious for being more complex than domestic payments, cross-border payments have numerous variables (such as jurisdictions) and concerns over uncertainty from risk and compliance barriers. Pressures on cross-border payment rails, which facilitate the flow of data to make transactions possible, have grown in tandem with digitisation. The chain of involved parties and complexities such as varying regulations, infrastructural qualities, and foreign exchange rates, have created numerous points of friction. Consequently, as businesses enter new markets, they face numerous challenges, such as risk, time constraints, lack of transparency in the payment process and foreign exchange rates. 

The main areas of friction include: 

• Speed: The time it takes to receive funds in a cross-border payment
• Cost: The total cost of sending a cross-border payment for the payer and payee. Including transaction fees, FX conversion rates and fees, account fees and pre-funding liquidity
• Transparency: Availability of advance information about cost, speed, payment statuses and risks related to the transaction
• Risk: Having structure, policies and procedures in place to instil trust within the cross-border payment processing. These include: 
  • security controls around data
  • regulatory frameworks 
  • governance to outline the rights and obligations of all users, providers, payers and payees.

Cross-border payments have been surging in growth and undergoing radical transformation to meet growing demands in trade, mobility, digitisation and transportation. These changes are driven by regulatory developments, greater international and regional collaboration and innovations to simplify the payment process. Businesses have been making strides into new markets, expanding their customer base and are turning to providers, like fintechs, to facilitate cost-efficient and simplified transactions. Strides have also been taken at a global level to enhance interoperability, as seen with the G20 Roadmap for Enhancing Cross-Border Payments. Its focus is to improve interlinking arrangements, reduce intermediaries and embrace technological innovations that will ensure equal access for all continents to cross-border channels. By 2027, the G20 aims to make the global average cost of a payment no more than 1% and has pledged to eliminate remittance corridors with costs higher than 5%. 

Why are cross-border payments growing?

The response of the G20 and governmental projects comes as cross-border facilitation demands rise.  Behind the growth and conversation of cross-border payments is the rapid surge in internet penetration globally. Rising levels of access to the internet have given consumers 24/7 access to digital resources. For example, India had 692 million active users of the internet in 2022 and Africa had 570 million internet users. Growing rates of digitisation and internet penetration have placed demands on payment processes and corridors to facilitate cross-border commerce. The presence of the internet at a global level, and in remote areas, has facilitated widespread digital access and connectivity. Businesses and consumers are engaging in international trade, with higher expectations despite differences in geographical locations. This level of connectivity has reduced geographical barriers and made cross-border transactions more accessible. Consequently, consumers can now purchase products and services from businesses located in different countries, relying on online payment systems, digital wallets, and alternative payment methods. 

Technologies have been emerging to facilitate better payment interoperability between countries, regions, businesses, and consumers – giving access and financial inclusivity to global players. These technologies are bringing businesses the features they seek most to process global transactions easily. The benefits include speed, fraud management capabilities, availability of relevant payment methods, ease of integration, and FX management. 

Some of the technologies facilitating cross-border transactions include:

• Blockchain technologies are reducing the need for intermediaries and centralised resources because of their decentralised nature
• Digital currencies offer businesses instantaneous value transfers, irrespective of geographical location. Central bank digital currencies (CBDCs), for example, combat payment settlement time issues as they can be settled in real time because of their digital nature
• Artificial intelligence brings a wealth of enhancements to cross-border processes by automating them to reduce time constraints and the risk of human error. Its ever-learning abilities offer promise to minimise fraud by noticing irregular activity, enhance customer service and simplify settlements with automated payment processes
• APIs give businesses quick, easy access to accepting payments in several currencies. The speed of API integrations and stackable nature enables businesses to scale their capabilities and products quickly and conveniently; allowing customers to pay for goods and services internationally.

Unlimit provides businesses with an international infrastructure that goes beyond borders to help businesses grow globally. Known for removing payment borders, our international presence drives support for businesses of all sizes – from startups to enterprise brands. Our expert, local knowledge places businesses in a position of opportunity with new markets, allowing them to expand their service offerings, build brand loyalty, enhance their reputation, and seamlessly make cross-border payments. You can learn more about the state of cross-border payments in our latest guide. Download your free copy here.