Cross Border Commerce

Smarter Payments Are Crossing Borders

Smarter Payments Are Crossing Borders

Cross-border payments are immense, clocking in at $29 trillion in 2019 and projected to balloon to an estimated $39 trillion in the next two years. Moving that money securely and swiftly is another matter, however, as pandemic-induced chaos continues to roil markets and embolden hackers.

The familiar difficulties of cross-border payments – fees, currencies, funds trapped in transit –combine to form frictions that digital platforms are now removing from the equation.

Going deeper, we learn in PYMNTS’ June 2020 Smarter Payments Tracker® powered by Nium, that “dedicated remittance-as-a-service platforms have … emerged to take the burden off of banks and other companies handling cross-border payments. All of these alternatives to traditional remittance and cross-border payment systems will likely alleviate the pain points that tend to negatively impact the cross-border payments experience.”

And with The World Bank anticipating a 20 percent drop in remittances in 2020 due to the pandemic, seamless remittances will need to make up the difference.

The Remittance Reset

“The drop in remittance has [a] significant impact on world economies, especially for developing markets, which are highly dependent on remittances, as they are often seen as a source of spending power for recipients in [their] home countries. A decline in spending power often has severe repercussions on [a] country’s economy as [funds] are frequently used to create a fiscal cushion for governments,” Yogesh Sangle, global head of consumer business at the Fintech Nium, told PYMNTS.

Bad cross-border payments experiences have no place in this fragile business climate. That fact is driving a blur of FinTech innovation to get money where it needs to go quickly and safely.

“Increased demand in FinTech tools may lead digital remittance providers to the front lines, as visiting bank branches and cash exchange will not be an option for most people. The switch to digital enables a continuous and faster remittance flow, in turn encouraging remote spending to still occur as disposable income for recipients increases,” Sangle said.

“It also creates financial accessibility [for] traditionally unbanked or underbanked individuals, thereby opening new markets for businesses. The combination of speed and value [that] FinTech tools bring will expedite recovery for consumers in communities in a post-pandemic world.”

Humanity-First Payments 

Of the tens of trillions of dollars that will be sent cross-border in 2020, an estimated $572 million will be sent by migrant workers in the U.S. to friends and family back home. The June 2020 Smarter Payments Tracker® notes that these payments affect nearly one in three people living in the world today, and so have never been more vital than right now.

“Nearly 100 percent of cross-border payments, including remittances, were conducted via correspondent banking in 2012, but that figure has dropped by 20 percent as of 2019,” according to the Smarter Payments Tracker®. “Banks are instead turning to more advanced payment models that connect participating banks in a given country to a single transfer point, where funds flow to another country’s transfer point and then go directly to the receiving country’s bank network.”

Going by the name “remittance-as-a-service,” these solutions are developing into another example of digital transformation to save the day post-pandemic.

These solutions “…are contributing to the decline of correspondent banking and easing these remittance roadblocks substantially, reducing the stress on billions of migrant workers and their family members around the globe.”



The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.