The rise of digital payments has made the world more connected than ever, driving demand for cross-border transactions. However, a report from Visa found that 77% of consumers still rely on multiple payment methods for international transactions.
In fact, Visa revealed that the average consumer uses four different payment methods for cross-border payments, and two-thirds of respondents said they are actively seeking a single provider to meet all their needs.
Consumers want a reliable payment method as they spend more on cross-border transactions than ever before. Visa expects the cross-border payments market to reach $250 trillion in just the next two years. Consumers are also making transactions more frequently, with roughly a third saying they make weekly cross-border e-commerce purchases, while 45% send or receive payments monthly.
Fraught With Challenges
Cross-border transactions have long faced challenges, including regulatory barriers, high transaction fees, slow processing times, and a lack of transparency. While all these factors impact international transactions, Visa found that security was the top priority for consumers across all regions. The next three most important factors were trust, reliability, and fees, in that order.
Roughly 90% of respondents expect their cross-border payments provider to have robust fraud and security measures in place, and around two-thirds said fraud concerns have deterred them from using a cross-border option. In addition, many consumers reported stopping a transaction after suspecting fraudulent activity.
Achieving Ubiquity
The issues associated with cross-border transactions have led to several initiatives aimed at creating a more uniform global standard. For example, the Bank for International Settlements (BIS) is a global consortium of financial institutions that has launched several projects to address structural inefficiencies in the global payments system.
In addition, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) operates a global messaging network that it has used to develop an international payments system. Both SWIFT and BIS have explored ways to use emerging technologies like blockchain and tokenization to address security and efficiency challenges in cross-border transactions.
Crypto and stablecoins have long been considered strong candidates for cross-border payments. Additionally, the massive global networks operated by credit card companies like Visa and Mastercard suggest these organizations could play an important role in the future cross-border landscape. While it remains unclear which payment mechanism will achieve cross-border ubiquity, the demand is evident—and growing.
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