In a world where we can video chat with someone on the other side of the planet in an instant, why does sending money internationally still feel like it’s stuck in the past?
It isn’t hard to think of how life could be improved by hauling cross-border payments into the 21stcentury. Imagine:
- A freelance designer in Bali receives payment from a client in New York as quickly and easily as if they were in the same city.
- A small business owner in rural India can source materials from China without worrying about complex international banking procedures.
- Digital nomads can seamlessly manage their finances across multiple countries without ever stepping foot in a bank.
Add it up, and the payments industry is staring at a global opportunity as great as $200 trillion in volumes. That’s according to a new study by Visa. Obviously the firm is confident this prize is within reach.
There are many factors behind change. Here are three:
- A global workforce revolution, with 185 million migrants and 35 million digital nomads reshaping how we think about work and money.
- The e-commerce explosion, set to hit $6.3 trillion by 2024, demanding seamless cross-border transactions.
- Businesses going global, sourcing talent and resources from every corner of the world.
And yet, cross-border payment systems are still stuck in the dark ages, or at least the 20th century. Visa’s survey of global consumers finds 44 percent of them express frustration over slow payment deliveries, and only 2.3 percent of small and medium-sized enterprises are satisfied with their current payments setup when it comes to overseas transactions.
Many players, from fintechs to stablecoin operators to banks, are competing to meet these challenges. Visa Direct, for instance, is pioneering a new era of global money movement by:
- Enabling funds to be available within one minute or less for U.S. bank accounts starting April 2025.
- Providing a single point of access to over 8.5 billion endpoints worldwide.
- Introducing game-changing features like the Visa Alias Directory Service, allowing users to send money using just a phone number or email address.
But for every solution there are multiple questions and knock-on effects. These changes will impact the traditional correspondent banking system, for starters, which could impact the way banks can service their clients.
As payments evolve, so too can the businesses using these services. That should mean even more opportunities, particularly in Asian and other emerging markets where physical cash remains commonplace.
And how will governments and regulators adapt to this new era of borderless finance? Asia has been at the forefront of QR codes, e-wallets, and mobile payments. Its governments are still exploring ways to integrate their domestic real-time payments infrastructure. This will create new business models.
The breadth of change means that market participants with global reach across many touchpoints may have an advantage. Visa Direct is not the only player in this game but it brings a vast network and many decades of experience in cross-border payments.
Visa Direct has teamed up with DigFin to talk about this phenomenon. To learn more, download their paper, ‘Modern money movement: Make everywhere easy. It details many of the points made here, and then some.
