Gone are the days when a handful of financial institutions controlled global commerce, providing an economic infrastructure for international trade.
Fintech startups are rewriting the rules of the game, creating solutions that are seamless, secure, ubiquitous, and cost a fraction of the traditional solutions.
Cross-border payments is one of the segments witnessing rapid growth, especially after an incursion from fintech startups. Let’s dig a bit deeper and analyze some of the upcoming trends of this industry.
A Growing Cross-Border Payments Market
A report from Accenture predicts annual growth of 5.6% in cross-border payments, primarily driven by higher volumes in the C2B segment. eCommerce is one of the primary drivers of this growing cross-border payments volume. Online marketplaces are expected to bring $7 trillion in sales over the next five years.
At the same time, the demand for efficient cross-border payments is coming from multiple industries, including gaming and forex. The gaming industry is set to witness its revenue grow from $159 billion in 2020 to over $200 billion in 2023. And the forex industry is perhaps the biggest global trade in terms of daily transactional volume, over $6.6trillion.
Opportunities in Fintech: Leveraging Cross-Border Payment Systems
As global trade continues to soar and more industries seek efficient cross-border payment systems, we’re set to see massive innovation in the international payments industry.
The cross-border payments segment is one of the principal sectors for fintech startups to venture into.
The induction of technology-driven solutions can help multiple industries cut their transactional cost and experience quick payment settlements. An e-wallet is one of the finest offerings under the current international payments infrastructure.
E-wallets operate the same way as any other business bank account, with the difference of providing financial services digitally, minus the transaction time businesses may witness in traditional banking.
For companies seeking high-volume international transactions, an e-wallet offers multiple benefits, including:
● Quick payment settlements: Instead of relying on banks to settle payments (which could take several days),businesses can receive prompt settlements. E-wallets cut the overall transaction period to less than 24 hours.
● Lower transaction charges: A traditional B2B or B2C transaction involves several intermediaries, which pushes the overall transaction cost higher. E-wallets reduce the number of intermediaries, thereby lowering transaction charges.
● Lower exchange fees: Businesses can benefit from favorable exchange rates by depositing funds in their e-wallets, thereby locking lower prices. Additionally, e-wallets can offer better exchange rates for bulk transactions.
● Hold funds in multiple currencies: E-Wallets come with the ability to hold multiple currencies, allowing a business to save on their currency conversion charges.
The ultimate beneficiary of this ongoing race is the international business community, including companies that are already servicing overseas clients and those planning to expand their business. Finally, businesses will be able to leverage efficient global payment infrastructure while spending fewer resources on fees.