Despite rapid digitalisation of global e-commerce, many online merchants still face payments barriers when it comes to expanding internationally. Banking Circle’s latest research into this dynamic topic highlights how payments businesses can utilise partnerships to improve the cross-border offering for their underlying customers.
Over the past two decades, digitalisation has accelerated the development and broadened the reach of businesses and customers to the point where online channels now matter to merchants more than physical shops. This has made cross-border trade significantly easier. Global e-commerce has broken down barriers and created a truly global digital marketplace. However, the high cost and slow transfer times of cross-border payments mean many sellers and merchants remain unable to access international markets.
The reality is that while SMEs accelerate their digital transformation, some of their partner banks and payment service providers (PSPs) struggle to tackle issues such as the cost and speed of cross-border payments, high fees, and the delivery of lower-risk transactions. Legacy technology and the correspondent banking model make it difficult for FIs serving merchants to deliver more affordable, accessible cross-border payments. The growing threat of de-risking only adds to the difficulties.
Since the 2008 financial crash, banks have had to protect themselves by avoiding higher-risk clients, and many have opted to carry out wholesale de-risking to avoid potential risks from entire regions or sectors. Consequently, many businesses and smaller banks cannot find suitable, affordable partners for non-core services including cross-border payments.