As has been noted in recent articles, the cross-border payments landscape is evolving rapidly, with digital transactions driving unprecedented growth in international commerce, travel and remittances.
Now Visa is getting in on the action with a new report, Unlocking the Future – Banking on Cross-Border Payment Habits, providing a deep dive into consumer behaviours, highlighting the trends shaping the industry in 2024 and beyond.
With cross-border payments projected to reach $250 trillion by 2027, financial institutions and fintechs have a prime opportunity to position themselves as the go-to providers for seamless, secure, and efficient transactions.
The Rise of Cross-Border Transactions
The report surveyed 6,500 consumers across 13 countries to understand their cross-border payment habits.
The findings indicate a significant shift toward frequent and diverse international transactions:
- 67% make monthly cross-border e-commerce purchases
- 52% travel abroad at least once a year
- 45% send or receive remittances monthly
Despite this high engagement, most consumers (77%) use multiple payment methods, indicating dissatisfaction with current solutions.
The demand for a single, seamless provider is evident with 66% actively seeking a preferred payment platform.
The Challenges of Consumer Loyalty
The lack of consumer loyalty in cross-border payments presents both a challenge and an opportunity for banks and fintechs.
While traditional banks handle the majority of transactions, consumers remain open to alternative options:
- Only 16% of consumers have a default payment method for cross-border transactions.
- 71% want more guidance in selecting the best payment option.
- 90% prioritise security, with Gen Z (75%) expressing heightened concerns over fraud risks.
This fragmented market means that no single provider has emerged as the dominant choice, leaving the field open for fintech disruptors and digital payment innovators.
E-commerce, Travel and Remittances: The Big Three
Visa’s report identifies three major categories driving the growth of cross-border payments: e-commerce, travel and remittances.
E-commerce: The Engine of Growth
- 72% of cross-border purchases involve physical goods from global retailers.
- Consumers rely on credit/debit cards (51%) and digital payment services (36%), but bank/wire transfers and peer-to-peer (P2P) services are also growing.
- Social media marketplaces remain a niche, with only 30% purchasing via these platforms.
Market trends indicate that security concerns and ease of use significantly influence consumer behaviour.
For example, German consumers prefer digital payment services (49%) over traditional credit cards (32%) due to enhanced security.
Travel: Payment Preferences on the Move
- 62% of travellers use credit or debit cards to book and pay for expenses abroad.
- Bank transfers (21%) and digital payment services (20%) are gaining traction as alternatives.
- Travel habits vary by region – Canadians favour card rewards, while Brazilian travellers opt for instant payment solutions like Pix.
The reliance on card networks underscores their convenience and fraud protection, yet alternative payment methods are steadily capturing market share.
Remittances: A Lifeline for Many
- 45% of respondents send or receive remittances monthly.
- Bank/wire transfers (45%) remain dominant, but digital wallets and online money transfer services (26%) are growing rapidly.
- In markets with high migrant populations, such as the UAE (87%) and the Philippines (74%), remittance flows are a crucial part of the economy.
The high cost and complexity of traditional remittance channels create opportunities for fintech innovation, particularly in markets where digital alternatives offer lower fees and greater accessibility.
Security: The Ultimate Dealbreaker
Across all transaction types, security remains the top priority for consumers:
- 63% of travellers, 62% of e-commerce shoppers, and 59% of remittance senders rank security as their main concern.
- 88% expect banks and fintechs to provide robust fraud protections.
- Fear of fraud is a major deterrent, with two-thirds of consumers halting transactions due to security concerns.
Consumers demand trusted, transparent, and secure payment options. Without these assurances, they are quick to switch providers, making security a non-negotiable for any cross-border payment solution.
The Opportunity for Banks and Fintechs
Visa’s report underscores a pivotal moment in the evolution of cross-border payments.
Consumers are forming habits, but they have not yet settled on a single preferred provider.
This presents a unique window of opportunity for banks and fintechs to:
- Simplify the decision-making process by offering clear guidance and educational resources.
- Enhance security features to build consumer confidence and reduce fraud risks.
- Expand payment options to cater to diverse preferences, from traditional banking to emerging digital wallets.
- Streamline remittance services to compete with lower-cost, faster fintech alternatives.
The Future of Cross-Border Payments
Visa’s latest findings reveal that while cross-border payments are booming, consumers remain in search of a frictionless, secure and reliable provider.
Banks and fintechs that can deliver on these expectations will capture long-term loyalty and drive sustained growth in the evolving payments landscape.
As the industry moves toward $250 trillion in cross-border transactions by 2027, the battle to become the dominant provider is intensifying.
The winners will be those who invest in security, optimise user experience and innovate to meet global demand.
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