Why Cross-Border Payments Are Key for Your Business

Geographical distance has become irrelevant to doing business in the digital world. Companies are growing across national borders, entering international markets, and interfacing with suppliers, companies, and consumers around the world. But while going global has become easier, in the way companies can now easily market and sell their products and services online from anywhere in the world, the real game changer has been cross-border payments.

International payments are no longer slow, costly and opaque. Rather, it is a new breed of global payment processors that are driving business agility, powering new revenue streams and allowing for immediate transactions from one continent to another. Banking conventions from international wire transfers to payments in cross-currency are revolutionizing the structure of global business in a subtle but significant way.

This blog post discusses the changing nature of business today globally through cross-border transactions, with the data and trends to support it and the impact on businesses, big and small.

The Cross-Border Payment Revolution: A Snapshot

International business is flourishing. In 2023 McKinsey™s report indicated that over $156 trillion came in cross-border payment flows, the majority of which were from B2B. These transfers, often controlled by legacy banks and SWIFT were often slow, expensive, and complicated by compliance issues.

But that™s changing. The emergence of new technologies, like blockchain and fintech applications, as well as regulatory changes, are allowing for faster, cheaper and more secure international remittance and payment solutions.

Key Drivers of Change

- Financial Digital Transformation Fintech companies and neobanks are using APIs, AI and decentralized ledgers to create seamless international payments solutions. Consumer and SME payments are being taken care of by platforms such as Wise (ex-TransferWise), Payoneer and Revolut, while Ripple and SWIFT gpi are improving B2B and institutional transfers.

- Global E-Commerce Boom The World Trade Organization estimates that global e-commerce sales will surpass $5.5 trillion in 2023. Businesses selling across borders need payment infrastructure that supports multiple currencies, offers real-time settlement, and ensures buyer confidence. Secure cross-border payments are no longer optional”they are the foundation of trust in digital trade.

- Regulatory Harmonization and Open Banking Markets like the EU and parts of Asia are standardizing regulations around foreign exchange payments and anti-money laundering (AML) compliance. Open banking frameworks are fostering interoperability and enabling businesses to integrate cross-border capabilities directly into their platforms.

How Cross-Border Payments Are Shaping Business Models

1. SMEs Can Now Compete Globally

High costs of international wire transfers and unpredictable currency conversions rendered small and medium-sized enterprises(SMEs) at a historical disadvantage globally. Today, thanks to fintech-driven solutions, SMEs can accept and disburse payments in many different currencies at a lower cost and thus compete on a more equal footing with larger businesses.

For example, the Nigerian e-learning platform via Payoneer Backpackers can collect payments from students in the US, the UK and Germany through Payoneer, in local currency. It then also instantly and transparently converts the funds at a favorable FX rate into naira.

2. Real-Time Settlements Enable Supply Chain Resilience

In global supply chains, timing is prime. Delays in payments can affect operations, lead to penalties, or stall shipments. Just-in-time settlement of modern cross-currency payments means that manufacturing, wholesale and logistics firms can also improve working capital.

The Fact: SWIFT gpi reports that more than 96% of cross-border payments are credited in less than 24 hours, many within minutes, instead of taking several days as they used to.

3. Multi-Currency Wallets Enhance Customer Experience

Marketplaces, travel platforms, and SaaS companies are building multi-currency wallets for payments internationally. These help increase conversion rates and cut down on cart abandonment by allowing the customer to pay in their currency of choice.

The insight: Stripe has found that businesses providing transparency around checkout currency experience as much as a 30% increase in payment checkout conversion rates, with the most striking results found in developing regions such as Southeast Asia and Africa.

Challenges in Cross-Border Payments

There is, but, friction in global payments systems. There are some important barriers to this: 

The Rise of Blockchain and Decentralized Cross-Border Transfers

Crypto and blockchain offer a different model. Platforms such as RippleNet and Stellar help international wire transfers in real-time, in a matter of seconds, with almost zero cost using tokenized assets.

Plus, even central banks are looking at the possibility of central bank digital currencies (CBDCs) to make safe cross-border payments more easily traceable and faster. By 2024, China, Nigeria, and the Bahamas were among those countries that had made progress toward cross-border CBDC applications in their pilots with encouraging outcomes.

There are still issues of scalability, regulation, and consumer trust that prevent mass adoption, but the foundation is there.

- The complexity of regulation: Each country has its own set of international remittance and AML/CFT compliance regulations.

- Foreign Exchange risk: FX rate fluctuation may affect earnings.

- Fragmentation: Delays are still caused by legacy systems and non-interoperability, particularly in corridors that include developing economies.

That said, issues of scalability, regulation and trust are still an impediment to mass adoption, but the foundation is there.

Sector Spotlights: Where Cross-Border Payments Are Thriving

1. Freelancing and Remote Work

International payment solutions are used by platforms such as Upwork and Fiverr to pay freelancers in more than 190 countries. Post-pandemic, remote work has been rising, which in turn has increased the need for inexpensive, instantaneous international payments.

2. E-Commerce and D2C Brands

D2C brands that sell on Shopify or Amazon also require a strong foreign exchange payment infrastructure to be able to sell to customers around the world. Integrations with services such as Stripe, PayPal, and Adyen allow seamless experiences across borders at checkout.

3. B2B Marketplaces and SaaS

Enterprise SaaS and wholesale platforms can integrate global money transfers via APIs, which connect seamlessly with accounting software and CRMs, creating less friction in recurring billing and procurement cycles.

Looking Ahead: What Global Businesses Should Do

Internationalization of payments is not a trend, but a transformation. Those who do not adapt will be left behind. Here™s what the progressive businesses of tomorrow need to focus on:

- Work with cross-border capable fintech partners: Work with payment providers that are strong internationally and have clear pricing.

- Automate currency: use platforms that mitigate exposure to currency disruption via automation and FX tools.

- KYC/AML across the board: Be and find partners able to deal with KYC/AML in different jurisdictions.

- Security first: Secure cross-border payments are a must, with fraud detection and encryption in an era of cyber threats.

Conclusion

Cross-border payments have ceased being a back-office function and are instead a front-office strategic advantage. Here, they are redefining what businesses can do by providing the ability for effective money transfer across the globe in real-time, secure internationally accepted payments that allow customers to feel a sense of trust and payment solutions that are cheaper and less complex than traditional methods.

Whether a lone freelancer in Lagos working for clients in London or a multinational exporting from Vietnam to Brazil, borderless transactions are the new way for the world to work. The companies that œget it with international payments will have the advantage, not just in payment efficiency but in global capabilities, financial strength, and satisfied customers.

As technology evolves and more inclusive structures become the norm, international wire transfers, foreign exchange payments, and cross-currency transactions will keep being less of a barrier. In this vision of the future, geography will cease to determine opportunity and connectivity, and payment agility will.