The turbulent nature of Global Cross-Border payments is set to undergo massive upheavals in the coming years due to various reasons. Up and coming players in the market will challenge the traditional powerhouses of the international money transfer scene.
Researchers and experts have unanimously claimed that the global cross-border payment flows will reach upwards of $156 trillion in 2022. The figure represents the universal revenue generated by international payments pertaining to all kinds of businesses – B2B, B2C, C2C.
The multi-trillion dollar industry has started feeling the repercussions of the addition of new market players. These new players address and resolve long-standing issues in the global payments sector. The traditional banks and international financial institutions have all stood up and are taking notice of the impact these fledgeling players are having on the market.
Before delving into the impact, let us understand how traditional financial bodies approach cross-border payments.
As the name suggests, cross-border payments are the currency exchanged between people or businesses situated in different countries and facilitated by a front-end provider, namely, a bank or any money transfer operator.
Traditionally, the money sender opts for a front-end provider to initiate the payment from their country. The front-end validates the submitted documents and then finalises the transaction. The receiver then receives the specified amount in a medium set by the sender.
The traditional money transfer bridge is quite long and flows via a correspondent banking network (CBN). Correspondent Banking Network is a network of financial institutions connected via a channel to enable cross-border payment services across the globe for customers. These channels are constituted of several overarching architectures.
Payments through these networks are filled with redundancies that require necessary upgrades. The upcoming payment systems are powered with superior technologies that make these banking networks seem archaic and less efficient.
In recent years, technology partnered with the zeal to innovate constantly has contributed heavily to
- optimising cross-border payments,
- allowing interoperability between payment methods and
- bringing new possibilities to connect sender and receiver
The trillion-dollar industry is gearing up for a massive overhaul
Banks have always been at the forefront of the cross-border payments market. For many years, a few banks held a monopoly over the global money transfer market. These banks were dominant and had no competition in the market; this gave them unhindered access to manipulate the architecture of the cross-border payments system.
Several pain points went unaddressed due to the complacency generated by the lack of competition offered to these banks. Some of these issues include:
- Limited transparency
- Lengthy settlement periods
- Massive transactional costs
- Reduced accessibility
These limitations have weighed heavily on the rise of superior technologies; the international money transfer landscape has been shifting toward a laser-focused approach. Various companies have been segregating their business strategy based on geolocations, transaction sizes and payment demographics.
The latest entrants aim to alter the nature and the operational mechanisms of the entire cross-border payments market. The primary focus of these entrants is the budding B2C market; business leaders across the world believe that the true potential of the B2C global payments market remains untapped.
The B2C transaction is expected to grow upwards of $1.6 trillion in 2022. These payments include wage salaries, migrants sending and receiving funds to and from their families and mortgage payments.
The Way Forward…
The entry of these new and upgraded money transfer platforms has unparalleled applications in the cross-border payments market. Global money transfer platforms such as ATL Money Transfer have risen to the occasion with their state-of-art software and excellent customer service.
Sending money has never been easier; ATL Money Transfer is a globally trusted money transfer platform handling thousands of transactions daily and provides a great alternative to bypassing the redundancies caused by traditional money transfer avenues.