The pace of innovation in cross-border payments is relentless, with regular announcements of new technologies and partnerships. Yet even as the ecosystem evolves, adoption of these solutions by commercial users remains slow and uneven. As shifting tariffs force global businesses to reconfigure supply chains, financial institutions have an opportunity to step in with guidance and solutions tailored to meet rapidly changing cross-border payment needs.
In the Tech Meets Tariffs: Cross Border Payments in 2025 report, Hugh Thomas, Lead Commercial Payments Analyst at Javelin Strategy & Research, examines the impact of tariffs across multiple industries, explores how financial institutions can offset a potential decline in cross-border revenue, and highlights the opportunity for a new way forward.
Weathering the Tariff Storm
Many cross-border payments providers likely serve customers who are considering re-shoring their supplier base to domestic partners to avoid tariffs. For example, a U.S. company with an established Canadian partner may now be weighing whether it is worth absorbing a 10% cost increase to continue this relationship or switch to a stateside supplier.
Since tariffs affect each industry differently, these decisions can quickly become complex.
“In the U.S. oil and gas industry, probably 30% of oil and gas inputs come from Canada,” Thomas said. “The supply chain for refining is designed to take Canadian oil sands, and where else can you get that from? Argentina is the only place that produces that sort of crude, and they’re not online right now to send that stuff up, so the chance to change the supply chain for that industry is very low.”
Conversely, the grocery industry sources much of its produce from Mexico. In this case, companies face fewer barriers when switching to a U.S. supplier, offering different fruit products, or pivoting to entirely new ones.
Another aspect that comes into play is which industries maintain higher days of inventory. For example, the top 10% of the construction industry’s inputs come from cross-border sources. However, many builders carry roughly 130 days worth of inventory on their books.
“They can weather the storm on these tariffs if they wind up being something temporary, which Trump tries to negotiate away on an industry-by-industry or even a company-by-company basis,” Thomas said. “Providers should be thinking about the industries that they bank, and how they’re going to support them to weather the storm.”
Making the Donuts
If tariffs linger and cause more U.S. companies to switch to domestic suppliers, financial institutions could potentially lose revenue from cross-border payments. However, there are several ways that these institutions can adapt.
“One way is if the business needs to bring on new suppliers, maybe there’s an escrow play in there where your first six months of payments are contingent on delivery of goods, particularly for big strategic buys,” Thomas said. “There is also the opportunity to move some customers to commercial cards because that’s a quick way to avoid Know Your Supplier (KYS) expenses, and maybe get a little bit of rebate revenue from your card provider. “
Another approach is to make cross-border payments more efficient. For years, these transactions have been plagued by issues such as high transaction fees, slow settlement times, fraud, currency conversions, and regulatory barriers.
Recently, there has been a flood of systems and solutions designed to make cross-border payments easier, cheaper, more automated, and more transparent. These range from programs managed by credit card networks to projects driven by a consortium of central banks.
Some speculate that connecting real-time payments systems globally could offer the most effective cross-border solution.
Digital assets like crypto and stablecoins have also been presented as the ideal solution for cross-border payments, due to their decentralized nature and blockchain-based security.
While each solution offers unique benefits—and some have gained more traction than others—widespread cross-border payments implementation continues to lag.
“Adopting these technologies is moving at about the same pace as getting rid of checks is moving—glacial is the best way to describe it,” Thomas said. “That’s because the people who are in the business of managing business payments, be they domestic or cross-border, have most of their days spent making the donuts, they don’t have a lot of time to tweak the recipe.”
Two Forces Driving a Reckoning
Because operations take precedence for many enterprises, financial services providers must offer products that deliver impact from day one, without requiring significant build-out or customization on the customer’s end. Additionally, the business use case for any cross-border solution must be both vital and practical.
Once financial institutions identify the use case and the right solution, they will be well positioned to support their commercial customers at a time where many could face a seismic shift in their supply chains.
“These crisis moments have the potential to drive things forward if they make everybody have a reckoning, in terms of how they’re doing things today from a process perspective,” Thomas said. “You have this unprecedented situation of a potential supply chain reevaluation—which is a huge force at work right now—and you’ve got a broader move to go more global, which is still persistent despite the fact that people are putting their tariffs up.”
“There are those two forces at work and then there are all these technologies waiting for someone to look at them more seriously,” he said. “Maybe all this disruption can get people to the point of saying, how we did business yesterday is not how we will do business tomorrow.”
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