Cross-Border Payment Trends and Implications

Cross-border payments are purchases made between two parties located within different systems of jurisdiction. As cross-border payments increase in parallel with globalization and technological progress, technological developments such as NFTs have become increasingly relevant. Meanwhile, the capacity to increase cross-border payments for business gain amid globalization has greater potential. These types of payments may or may not involve any conversion of currency, and NFT potentials have become increasingly attractive amid their capacity to be strategically applied.

The market for cross-border payments has been categorized as either wholesale or retail-based, with substantial differences between the two. In terms of retail-based activity, payment end users are generally individuals, businesses, or government agencies, while the quantity of funds integral in the exchange is generally lower. In wholesale contexts, the payment parties are generally financial institutions, and they generally involve larger transfers between organizations or to a customer. Expansions of the globalization phenomenon and e-commerce technology accessibility has involved increased mobility potential of products, and increases in international sales in general support market research concluding increased willingness or interest for consumers to purchase outside of their region of location. 

While many people may feel that they are best supporting their domestic economy (i.e. feeling a sense of ethical or moral-related duty to do so), others may pressure them to simply follow the most strategic process conceivable. The increased potentials for organizations to benefit from foreign outsourcing or purchases has involved increased pressures to make the most strategic purchases possible. Cross-border payments have been increasingly strategic in general availability and cost senses, while ethical value in domestic support has been countered by a combination of fundamental strategy and competitive advantage as participation increases.

E-commerce mediums have most greatly facilitated cross-border payments. Growth in payments observed is expected to continue mostly in response to continuing e-commerce expansions. Recent measurements of e-commerce sales totals have included approximately 15-20% of amounts being definable as cross-border payments. International travel and migration increases have further increased cross-border payment demands. The combination of their size and growth have made them regarded as a critical aspect of net payment amounts by experts and analysts. 

An influential aspect in continuing uses of cross-border payments has been international remittances. They have been an important aspect of financing for individuals in developing countries, as they may have potential to compete with unique resource availability or cost in advertising overseas. Remittances have therefore been helpful in aspects of economic growth, and have increased in the past decade. They are expected to experience growth in the near future as well.

Development is expected to occur somewhat in parallel with development in blockchain, as increased use of blockchain in order to receive its benefits facilitates international trading to some degree. Cross-border payment systems promoting the use of blockchain may develop further from the current extents of decentralization establishments and facilitations. Technological improvements in both areas may result in some extent of reciprocal relationship manifesting.

Optimizing technological processes involved in payments has included payment architecture systems and shifts in how users engage with required technology. Payment service providers have been spearheading aspects of technology development while working to optimize consumer experiences, with cryptocurrency demands increasing alongside blockchain demands. Stablecoin has experienced increased popularity while being regarded as less volatile than Bitcoin, and it has been stabilizing in value while treated as a commodity.

Blockchain technology has been used in a way that successfully reduces the extent of effort required to complete an international transaction, which can reduce costs while facilitating use, but further discourages crime (by lowering the amount of potential access points). Cross-border payments can potentially drive progress into the positive aspects of blockchain through applied strategy.

Other factors ideal to consider in continuing strategy, which have been observed as impactful in cross-border payments, include international payment method acceptance, fee use trends, and consumer payment preferences. New systems have placed focus on adapting technologies to preferences and location of consumers in their target market, and have to address evolution regulation systems spanning data privacy demands, payment networks, and criminal law. 

The future of cross-border payments is expected to include a further integration of blockchain. Hardware and software capacity improvements have improved connectivity, and design strategy will address economic and preference developments. Competitive and comparative advantage will control the development of future use, and security will evolve to address improved criminal potential.

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Phil Tadros - Founder
Philip Tadros is the Founder of Doejo an award winning Innovation Studio with over 30M dollars sold in Innovation, Consulting and Business Development services.