Report: Cross-Border Payments Are Projected to Grow Rapidly Over the Coming Year
November, 2023
As the borders open and economies force people across the globe to relocate, cross-payments have become incredibly important to today’s world. It is no wonder we are seeing “tremendous growth” in the cross-payments sector.
Total remittances reached $794 billion last year alone. With the inflow of cash making more than 15% of the GDP in 25 countries where the income in low. It is expected that this year, these remittances will rise to more than $810 billion.
The 2023 borderless payments report by Mastercard pointed out some of the challenges cross-border payments face, and the potential to address them.
The primary remittance-related challenges facing consumers and businesses include late or failed payments, the risk of fraud, and knock-on effects of being unable to support their own in-country payments.
The report surveyed over 11,000 consumer and small business in 15 different markets across the globe.
50% of people who have made a cross-border payment over the last year admit they are considering moving abroad. India has the highest amount of these individuals at 72%, followed by South Africa (%71), Colombia (69%), and the Philippines (66%).
41% of respondents said they expect to make more cross-border payments over the next year (41%) and 46% say their cross-border payment will be a higher value.
Correspondents also revealed the key factors that help them determine how to send their money home to their families, these included: level of fees, speed, and simplicity.
The report also taps into how important cross-border payments are for small businesses; 61% of small businesses said they rely more on international suppliers than 12 months ago, and 65% say they expect to source abroad even more next year.
Experience amongst the population with all of these remittance options has been mixed. 32% of consumer respondents and 37% of small businesses have experienced a failed or late payment. 47% of these businesses say the experience made them more wary of using cross-border payments, and as a result they choose to go with domestic suppliers, despite the higher costs.
Fraud is also a big concern when sending money whether it is domestically or internationally.
More people have been victims of fraud when sending money domestically (23%) rather than cross-border (17%). The issue of getting money returned for either is a struggle. 66% of correspondents who were victims of domestic fraud, and 71% of correspondents who were victims of cross-border fraud said they never received their money back.
There’s a lot of kinks to work out when it comes to remittances or cross-border payments, but the truth is, these payment systems need to improve as the world opens up and people migrate to find new opportunities.
Experience amongst the population with all of these remittance options has been mixed. 32% of consumer respondents and 37% of small businesses have experienced a failed or late payment. 47% of these businesses say the experience made them more wary of using cross-border payments, and as a result they choose to go with domestic suppliers, despite the higher costs.
Fraud is also a big concern when sending money whether it is domestically or internationally.
Among these important connections, the ability to make and receive payments quickly and easily is crucial, but failed, late and fraudulent payments risk undermining trust in these crucial networks. We must come together to enable money to move more safely, simply, reliably and transparently.
Want to learn more? Check out Payments Cards and Mobile’s full write-up here.
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