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Cross-border payments: the past, present and future

Have you ever paid for a product from an internationally based firm? If your answer is yes, then you will no doubt be familiar with the increased costs and long timescales involved with cross-border payments. However, the impact of tech has shaken up the industry in recent years and banks are no longer the sole governors of such interactions. So, what does the future have in store for cross-border payments and how this may benefit consumers?


      • What are cross-border payments?

      • Types of cross-border payments

      • Why are cross-border payments an important issue?

      • How do cross-border payments work?

      • The market size of cross-border payments

      • The impact of blockchain on cross-border payments

      • The future of cross-border payments

    What are cross-border payments?

    Cross-border payments involve a financial transaction between two people based in different countries. They can be consumer-based, such as one person buying an item from an online store that happens to be based 10,000 miles away. Or they can simply result from one person transferring money to an overseas-based friend.

    Cross-border payments were traditionally associated with banks only, but the FinTech industry has opened up the market, allowing a host of different providers to get involved in the international money transfer business. 


    Types of cross-border payments

    Cross-border payments can loosely be split into three different types:

    1. Retail

    These are usually person-to-business transactions, such as an individual buying a product from a store that’s based overseas.

    1. Personal

    This is usually a payment sent between two friends or acquaintances. Let’s say you’re Welsh and your flatmate happens to be Chinese. During a trip back to Asia, they send you money owed for utility bills or other shared expenses.

    1. Wholesale

    Wholesale payments are generally business-to-business. They may involve a business buying its stock wholesale from an overseas market. Or they may include a UK-based financial institution doing business with an African-based one, such as borrowing money or trading goods and services.

    Why are cross-border payments an important issue?

    We’ve been moving towards a global consumer market for decades, and the digital revolution has sped things up tenfold. 

    As we know, cross-border payments are traditionally expensive and time-consuming. Anyone above the age of forty might recall pre-internet mail order products always coming via a ’28-day wait.’ What once seemed like a perfectly reasonable timescale was quickly reduced by the online dream-turned-reality of next-day delivery. 

    International payment apps have improved transfer timescales and costs beyond what we once believed to be possible. The job that payment apps have managed to pull on the banks is akin to how the web has changed delivery waiting times forever.

    Furthermore, the likes of blockchain have shaken up an industry steeped in mystery and tradition – so much so, that some of the world’s leading financial institutions are already adopting its model to improve their level of service.

    Payment options

    A quick search online and you’ll discover a host of payment options out there. As always, do your research and compare costs before you set up any transactions. Some apps are designed to be used to send money from or to specific countries, so be sure to find one that’s best suited to your needs.

    To give an example, the WorldRemit app enables users to send money from over 50 countries to any one of 150. In most cases, their transactions will take no more than 10 minutes and cost an average of 46% less than the banks.

    Another option is Wise, formerly TransferWise. Wise enables transactions between 59 countries, with this number set to grow. Transactions can take less than a minute and are up to 6X cheaper than a UK bank. 

    WorldRemit and Wise are just two options and it’s clear that the monopoly on cross-border payments that the banks once enjoyed is very much a thing of the past.

    If you’re currently working in finance and fancy a futuristic change, check out our article on Finance to FinTech: why it’s time to make the leap.

    How do cross-border payments work?

    Whether you make a cross-border payment through a bank or app, the procedure is largely the same. No money actually travels overseas. In reality, most financial institutions have foreign accounts set up overseas. They’ll simply credit their overseas account with your requested amount, then transfer it to the account you’ve stipulated.

    Cross border payments

    The market size of cross-border payments

    Business-to-business cross-border payments alone were worth $1,000 billion in 2021. Experts estimate that the market could reach $2,515 billion by 2030. Commentators on the projected market share of cross-border payments all tend to emphasise the potential for FinTech creations to surpass bank-to-bank transactions. Technology holds the key to reduced costs and timescales. 

    The impact of blockchain on cross-border payments

    SWIFT revolutionised cross-border payments back in the day by enabling financial institutions to collaborate and allowing an easier passage of money between nations. In 2022, this method was shown to be out of date. 

    Once the preserve of cryptocurrencies, the benefits of blockchain technology have not been lost on financial institutions. For starters, blockchain dramatically reduces the number of middlemen and digital ‘handshakes’ needed for a transaction to go through successfully. Payments made through blockchain technology are safer and quicker than those made with SWIFT and can be validated by the technology even before the money has been transferred. 

    FinTech remains one of the most exciting industries out there. Find out more with our post on Why work in FinTech? 6 reasons to come and join the party.


    The future of cross-border payments

    The combination of an ever-more global business world combined with the solution-wielding sector of FinTech means that cross-border payments will remain in the news for some time yet. Given that cross-border payments have long been such a divisive issue for their costs and timescales, any innovator that manages to improve the user experience is likely to reap the rewards – at least until their competitors catch up. 

    For now, expect to see a host of new FinTech solutions launched in an attempt to solve the riddle of cross-border payments. There’ll be much competition regarding prices and timescales, with the other big issue being the transactional model used. Expect to see a growing presence of blockchain-esque platforms, which could, in fact, become the norm before most of the world notices.

    For additional information on cross-border payments, reach out to the team here or contact [email protected]


    Cross-border payments profoundly influence global economic trends and financial stability. They facilitate international trade, encourage investment, and promote market integration, fostering economic development worldwide. Efficient cross-border payment systems reduce transaction costs, currency exchange risks, and improve liquidity, enhancing financial stability. Moreover, they can address financial inclusion challenges by providing access to global financial networks, empowering underserved populations, and stimulating economic activity in emerging markets.

    However, high costs, lengthy processing times, and regulatory barriers can hinder economic progress. Disparities in regulatory frameworks across jurisdictions create compliance burdens and legal uncertainties, inhibiting payment innovation and interoperability. To maximise the potential of cross-border payments, stakeholders must collaborate to address these challenges, fostering transparency, efficiency, and interoperability in international payment systems. Stakeholders can leverage cross-border payments to drive inclusive economic growth and financial stability globally by promoting regulatory alignment, encouraging technological innovation, and facilitating cross-sectoral cooperation.

    Implementing blockchain in the financial industry faces regulatory, technical, and scalability challenges. Regulatory concerns include compliance with existing laws, AML/KYC requirements, and data privacy regulations. New regulatory frameworks may be needed to address these issues. Interoperability between blockchain platforms and legacy systems poses technical barriers, requiring seamless integration and compatibility. Scalability is a significant challenge, especially for public blockchains, impacting transaction speeds and costs. Security remains a concern due to vulnerabilities like smart contract bugs and 51% attacks. Energy consumption, particularly with proof-of-work consensus, raises environmental concerns. Overcoming these challenges is crucial for blockchain’s widespread adoption in finance. It requires addressing regulatory hurdles, ensuring interoperability and scalability, enhancing security measures, and exploring energy-efficient consensus mechanisms. Despite the hurdles, blockchain promises to transform the financial industry, offering transparency, efficiency, and security benefits.

    Traditional financial institutions are adapting to the evolving payment landscape by integrating technology and forming partnerships with FinTech firms. In response to the growing prominence of FinTech solutions, banks are incorporating digital payment services, enhancing customer experiences, and refining cross-border payment processes. Collaborative endeavours between traditional banks and FinTech entities are rising, aiming to capitalise on each other’s strengths. While banks provide regulatory expertise, established infrastructure, and customer trust, FinTech firms offer innovative technology, flexibility, and customer-centric solutions. Together, they strive to develop efficient and cost-effective cross-border payment solutions leveraging blockchain technology, digital wallets, and real-time payment networks. These alliances target challenges such as high fees, sluggish processing times, and opacity in traditional cross-border payments. Through collaboration, traditional banks and FinTech companies aim to create more accessible, secure, and user-friendly payment options for consumers and businesses, fostering innovation and competition in the financial sector.