How Digital Banking is Rising to the Challenge of Cross-Border Payments

Traditional cross-border payment methods are rife with pain points, with B2B solutions lagging behind innovations in the B2C space. Not for long, though – new entrants are challenging incumbents with innovative business models that offer fast, secure, more efficient and cost-effective cross-border payments.

How Digital Banking is Rising to the Challenge of Cross-Border Payments

Money is zipping across the world like never before. Borderless e-commerce, cross-border B2C payments and web-centred businesses are all contributing to a boom in cross-border payments. 

This type of digital jet-setting is far tricker than standard domestic payments, though. Cross-border payments lag domestic ones in terms of cost, speed, access and transparency. Some cross-border payments can take several days and can cost up to 10 times more than a domestic payment.

It’s no surprise then that the demand for fast, secure, cost-effective and efficient cross-border payments is an opportunity that fintechs have seized. While there are plenty of choices when it comes to solutions within the B2B sector, there are distinctly fewer within a B2C environment.

The value of cross-border payments is estimated to increase from almost $150 trillion in 2017 to over $250 trillion by 2027, equating to a rise of over $100 trillion in just 10 years. B2C represents a significant chunk of this. The global cross-border B2C e-commerce market was valued at $794 million in 2021, with that figure forecast to grow at a compound annual growth rate of 25.1% to $3,042 million by 2028.

$3,042 million

The forecasted value of the global cross-border B2C e-commerce market by 2028.

For businesses looking to expand into global markets, cross-border payments matter. Friction in the form of time delays or currency confusion put serious dampeners on business success and customer loyalty. Easing these common pain points with B2B payment solutions that include features like competitive, real-time rates and corporate and virtual payment cards is essential. 

How do cross-border payments work?

“International banks provide accounts for foreign counterparts and have their own accounts with their foreign counterparts, which enable banks to make payments in foreign currency. The funds are not sent across borders; instead, accounts are credited in one jurisdiction and debited the corresponding amount in the other.”

Bank of England

Cross-border payments are financial transactions in which the sender and recipient are in different countries. Fintechs and money transfer agents use the interbank network detailed above to provide process these payments for businesses and individuals.

They’re not simple, though, because of a variety of reasons. 

Cross-border payments: the downsides

“Payment infrastructures vary by country; the landscape of regulations governing cross-border transactions is fragmented by geography; and providers are plagued by complex internal business processes and operations.”


The traditional payments process leaves incumbent banks that are on the receiving end of a transaction with little predictability of when payment will arrive or what the amount will be after currency exchange calculations and fees. Know Your Customer (KYC) and compliance with regional Anti-Money laundering (AML) regulations can result in transaction delays, which only grows uncertainty in an already uncertain process.

It’s not all doom and gloom though…

New solutions driving global growth

Increasing demand is driving innovation. Innovation within fintech that’s seeing a new wave of cross-border payment providers emerge, including within a B2B space. 

By harnessing advancements in AI, APIs, blockchain, cloud, and robotic process automation, new payment providers are helping businesses send and receive cross-border payments rapidly, cheaply, transparently, seamlessly, and securely.

This transformation is set to have a major impact on not only corporates, but SMEs, too. Traditional, SMEs have comprised a lower share of cross-border payments than their share of GDP would indicate. But this is expected to change as their access to affordable international payments improves. 

“The SME segment stands to benefit the most from cross-border payments’ convergence and simplification—given that larger corporates have long had access to most of these capabilities.”


APIs: providing access to better rates 

Key to new cross-border solutions are APIs (Application Programming Interfaces). Fintech platforms that use cross-border payment APIs help businesses scale their capabilities faster by streamlining their payment processes and ultimately, growing revenue.

Under this model, users can securely send, receive, manage and spend dozens of currencies with better exchange rates, more transparent fees and faster delivery times than incumbent banks. 

Instead of using the traditional SWIFT network, cross-border APIs allow access and visibility to competitive FX rates in real-time. This means payments with better exchange rates than banks, as well as access to multi-currency account solutions to send, spend and get paid as if in-country, from all over the world.

Improved transparency 

New cross-border payment solutions also offer an increased amount of data related to transactions, allowing faster, more seamless settlement.  In traditional cross-border payments, much of the associated data does not ultimately make it through to the beneficiary. Without this information, bank clients struggle to reconcile payments efficiently. 

The wealth of data that accompanies payments throughout their lifecycle within a digital platform means being one step closer to the ultimate goal of frictionless, straight-through reconciliation. This is in part due to the growing adoption of ISO 20022, which is an international standard for relaying electronic messages between financial institutions that enables up to 10 times more data to be sent than previously.

International payments fuel the cross-border trade and investment that’s key to the success of today’s global economy. Friction-free cross-border transactions are crucial in order for businesses to enjoy the commercial benefits associated with connection to the global economy – whether they’re large corporates or SMEs.

Techcap gives you access to all the major payment schemes for easy, secure cross-border payments. Join us today and enjoy truly borderless banking.


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