Global B2B Cross-Border Payments Market Set to Reach $40 Trillion by 2024
by Rebecca Oi February 8, 2023The Business-to-business (B2B) sector has unique requirements when it comes to payments, which has resulted in the rise of cross-border payment solutions that cater to these needs.
These solutions allow businesses to make and receive payments in various currencies, with the added benefit of tracking and managing their payments in real time.
A new study from Juniper Research has found that the global spend on B2B cross-border payments is set to exceed US$40 trillion by the end of 2024, an increase from the current estimated figure of $37 trillion in 2022.
This represents a significant growth in cross-border payments being made between businesses worldwide. The study highlights the critical role that cross-border payments play in supporting the development of international trade and commerce and the need for efficient and secure payment methods in this sector.
Key Drivers of growth in cross-border payments
One of the key drivers in the growth of cross-border payments is the increasing globalisation of businesses. As businesses expand their operations into new markets and regions, they need to be able to make and receive payments from other businesses in different countries.
Digital payment systems have made it easier for businesses to make cross-border payments without going through traditional banking channels, which can be slow and expensive.
This has helped reduce the cost and time associated with cross-border payments, making them more accessible for businesses of all sizes.
Another critical factor is the increasing demand for faster and more secure payment methods. Businesses are looking for payment methods that allow them to make and receive payments quickly, safely, and with minimal risk.
This has led to the development of cross-border payment solutions that use blockchain technology to provide a secure and transparent payment system resistant to fraud and tampering.
The increasing demand has also led to the growth of fintech companies specialising in cross-border payment solutions.
These companies offer a range of payment solutions that cater to the specific needs of businesses, including digital payment systems, cross-border payment platforms, and cross-border payment APIs.
Challenges with cross-border transactions
According to Juniper, cross-border transactions can be complex and face several challenges that make them slower, more expensive, and less transparent than domestic transactions.
Some of the key challenges include currency exchange rates and fees, regulatory compliance, time delays, and security concerns. The need to exchange currencies between different countries can result in high prices and unfavorable exchange rates, significantly increasing the cost of cross-border transactions.
Additionally, other countries have additional regulations and laws that govern cross-border transactions, making it difficult to comply with them and adding time delays to the process.
Finally, security is always a concern regarding financial transactions, and cross-border transactions can be especially vulnerable to fraud and other types of financial crime.
Still, these issues are becoming increasingly manageable with the rise of new technologies and solutions, such as instant payments and digital currencies.
Instant Payments complementing cross-border experiences
Cross-border transactions have traditionally been slow, expensive, and challenging to track due to the various intermediaries involved, such as banks and financial institutions, and the differences in regulations and payment systems between countries.
However, this issue is being addressed with the rise of cross-border instant payment services, such as Instant Payments. These services use modern technologies, such as blockchain and digital currencies, to provide fast, secure, and transparent transactions, reducing the time and cost involved and making them easier to track.
This improvement in cross-border payment experiences has the potential to greatly benefit individuals, businesses, and the global economy as a whole.
Juniper notes that as such, the report recommends that B2B payment vendors offer features such as integrated virtual cards and IBANs (International Bank Account Numbers) for local payments to address these challenges correctly.
Cross border projects in Southeast Asia
Some notable projects in Southeast Asia include the ASEAN Economic Community (AEC), which aims to create a single market and production base for Southeast Asian countries.
The AEC aims to facilitate cross-border trade and investment by removing trade barriers and promoting economic integration and cooperation between member countries.
Another project includes the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT), a regional economic cooperation initiative to promote cross-border trade and investment.
Meanwhile, the Greater Mekong Subregion (GMS) Economic Cooperation Programme, involves six countries in Southeast Asia, including Cambodia, Laos, Myanmar, Thailand, Vietnam, and Yunnan province in China. The programme promotes economic growth and regional integration through cross-border infrastructure development and trade facilitation.
In 2021, Singapore and Thailand inked a bilateral agreement enabling users in both nations to transfer funds using a mobile number.
In addition to this, five central banks comprising Bank Indonesia (BI), Bank Negara Malaysia (BNM), Bangko Sentral ng Pilipinas (BSP), Monetary Authority of Singapore (MAS), and Bank of Thailand (BOT) have signed a memorandum of understanding to strengthen and enhance cooperation on payment connectivity to support faster, cheaper, more transparent and inclusive cross-border payments.
