B2B Transactions Represent a US$ 22 Trillion Opportunity for Cross Border Paymentsby Fintech News Singapore August 2, 2023
Remittance transfer providers have embraced digitalization to help alleviate many of the pain-points of the industry and enhance the convenience, speed, security, and affordability of sending and receiving from abroad. Now, these companies are expanding to offer business-to-business (B2B) payments, catering to companies of all sizes.
This evolution of the sector from retail to B2B presents opportunities for remittance specialists to meet the demands of businesses and ensure a seamless cross-border payment experience, a new blog post by Currencycloud, a B2B cross-border payment firm owned by Visa, says.
In a post, the firm explores how remittance providers can make the most of the opportunities of servicing the increasing number of companies that are using B2B cross-border remittance to grow their global business and improve operational efficiencies.
According to the release, remittances are playing a critical role in the global economy, contributing to economic growth and development of receiving countries, helping reduce poverty of developing nations and promoting financial inclusion.
Globally, it is estimated that 800 million people receive money from family or friends to pay for basic necessities such as food, housing, education, and healthcare. In 2022, total consumer remittances globally reached US$848 billion, a figure which FXC Intelligence, a provider of cross-border payments data and intelligence, projects will rise to US$1.1 trillion by 2025.
At the same time, the proliferation of smartphones and increased connectivity worldwide have fueled digitalization of the remittance sector.
Visa’s 2023 Digital Remittances Adoption Report survey, which polled more than 14,000 remittance senders and receivers across ten countries, found that 53% of the individuals surveyed reported using digital apps to send and receive funds. In Asia-Pacific (APAC), adoption of digital remittance was found to be the highest in the Philippines and Singapore where 70%-80% of respondents indicated using app-based digital payments.
The rise of global e-commerce
For marketplaces like Amazon, eBay, Alibaba and Etsy, cross-border payments are a critical component of their growth and expansion plans, enabling facilitated transactions between buyers and sellers located in different countries, increasing sales volumes by connecting buyers and sellers from around the world and streamlining transaction processes.
Cross-border payments play a critical role in facilitating seamless and efficient transactions in the global marketplace ecosystem, fueling the growth of cross-border e-commerce.
Cross-border e-commerce, the process of selling goods directly to foreign consumers through digital intermediaries, has received increasing attention over the past few decades.
Forrester estimates that cross-border shopping made up 20% of e-commerce in 2022, with sales reaching US$627 billion. Amazon, eBay and Alibaba are three prominent marketplaces for shopping cross-border. Cross-border sales are said to account for nearly 25% of third-party units sold on Amazon, the market research company estimates.
Business-to-business (B2B) is another fast-growing e-commerce segment, with the B2B cross-border payments market expected to grow 120% by 2030 and account for US$22 trillion in market size, FXC Intelligence projects.
E-commerce sales are expected to grow this year onwards, projected to account for 20.8% of total retail sales and 24% of total retail sales by 2026, data from Insider Intelligence show.
Booming cross-border e-commerce activity is introducing new opportunities for remittance companies to tap into rising demand for seamless, safe and transparent B2B cross-border payment capabilities.
Featured image credit: Edited from Freepik