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Top 5 Factors Customers Consider When Choosing a Provider of Cross-Border Payments

February 19, 2024

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Choosing a Cross-Border Payments Provider

Meeting customer expectations is key to succeeding in the evolving payments landscape. Here’s what your customers are looking for.

The global cross-border payments industry is forecasted to exhibit a CAGR of 7.3% between 2023 and 2032 to reach a value of $356.5 billion by 2032.

Source: PRNewsWire

Payment processing is one of the primary functions of the digital economy. Digital-first and digital-only FIs dominate the online payments space. Delivering on speed, transparency, and affordability requirements of customers, they have taken over the domestic markets from traditional banks and payment providers. The international transactions segment is awaiting a similar revolution with simplified money movement for individual and corporate clients. FinTechs, Neo Banks, and other players in the digital finance space can become torchbearers of innovation in the segment and lead the industry into its next era – one with cost-effective, transparent, and high-speed international transactions.

Intensifying Demand for Money Movement

The convenience of user-friendly interfaces, along with shrinking global business ecosystems, has motivated small and large enterprises alike to engage in international trade. According to the Borderless Payment Report by Mastercard, the second largest PayTech corporation in the world, cross-border payments are crucial to propelling the continued recovery of the global SME economy.

As of October 2023, 60% of small businesses were sourcing more supplies from international markets than they did a year ago.

Source: MasterCard

With half of the global youth wanting to travel abroad in search of higher income, the availability of convenient international transactions has become a business imperative. Further, expanding wealth, enhanced awareness of financial management, and higher retirement savings have increased the need for investment diversification. All these encourage consumers to look for convenient ways to navigate the complex financial landscape. Consequently, the demand for cross-border payments is rapidly increasing.

The introduction of frameworks, such as ISO 20022, is making way for standardization in transaction processes worldwide, which is likely to further raise customer expectations. New business models, such as open finance, direct-to-consumer offerings, and shared marketplaces are also spurring change in the digital payments space.

Additionally, the introduction of CBDCs, on which over 60% of economies seem to be focused, can further fuel the demand for and enable disintermediated exchange of value. 

Consumer Remains King

FinTechs, credit unions, and banks have massive opportunities to capture and stay ahead of the curve by simplifying cross-border payments. The key to capturing a larger market share is to understand and offer what the customer is looking for.

Data SourceCitigroup.com

#1. Immediacy: The Collapsing Time Phenomenon

As time becomes the new currency, instant gratification is the way to win the hearts of your customers. Instilling immediacy in remittance processes and valuing customer time over everything else is the secret to establishing long-term customer relationships. 

To accelerate transaction settlement:

  • Eliminate friction to enable payment in real time.
  • Automate redundant tasks, such as settlement conformation.
  • Anticipate needs and tailor offerings proactively.

#2. Convenience: Usability Trumps Accessibility

Users value convenience, whether it is the interface or processes. While the penetration of mobile phones has provided greater access to international payments, having a convenient and customizable interface is high on the customer’s priority list.

To make money movement convenient:

  • Offer real-time insights into the economic climate.
  • Have robust and resilient infrastructure.
  • Minimize cancellation and late remittances.

79% of consumers state that a real-time view of the economic situation will facilitate an improved rate of transactions.

Source: Mastercard

#3. Choice: More is Still Not Enough

Consumers prefer to have the choice to pick their preferred payment mode, payment rail, and currency, based on their needs at the time. In the global age, a customer may quickly move across economies or want to encash the difference in forex rates. They will prefer a provider that supports diverse currencies with preferred modes of payment in their respective economies.

To let your customers choose what they need:

  • Lay a flexible technology foundation that enables agility.
  • Ensure compliance with global standards.
  • Adopt cloud-based solutions to prevent operational consolidation.

#4. Transparency: No More Hidden Fees

Costs incurred are a key deterrent to encouraging frequent and smaller transactions. The global average remittance fee of 6.25% adds a financial burden on users, especially those in the emerging markets and lower-income countries.

Encourage international remittance by:

  • Maintaining transparency in fees charged.
  • Offer help to transfer at favorable exchange rates.
  • Alert customers regarding any fee changes.

#5. Security: Bolster Fraud Protection

Offering safe and secure payment mechanisms is crucial to gaining user confidence. A critical aspect here is incident management. Customers are becoming increasingly aware of security risks and want their providers to support them through adverse incidents and not abandon them. 

42% of users consider cross-border payments more prone to fraud than domestic transactions.

Eliminate fraud with stringent procedures:

  • Integrate security across processes with DevSecOps.
  • Disseminate reassuring messages, highlighting your security capabilities.
  • Establish clear incident prevention, detection, and management protocols.

 

Actionables for Industry Participants

Cross-border payment providers must design and develop their technology infrastructure considering the scalability and evolutionary needs of the expanding digital financial landscape. Simultaneously, top-notch experiences can be ensured by adopting cutting-edge technologies, such as AI/ML, cloud computing, and DevSecOps. A few action points here are:

Get up to speed with innovative change without losing focus on the soundness of operations, security of your customers or compliance with the evolving regulatory landscape. With 26 years of experience and expertise in the digital payments space, Opus Technologies drives digital transformation of FIs, FinTechs, banks, and payment providers. Speak to our experts to access best-in-class experiences to thrive in the cross-border payments market.

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