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As the name suggests, Cross-Border Payments are financial transactions carried out between two separate countries; the sender and receiver are situated in different countries. These payments are not specific to any sector; they can be wholesale or retail.
Cross-Border Payments can be broadly categorised into two parts:
The past few decades have seen a massive surge in financial transactions over borders. Businesses and people alike are cutting across timelines, distances, latitudes, and longitudes; the world is getting closer every day. Cross-Border payments have become much more significant owing to the surge in international trade and influx of migrants to foreign countries.
According to reports, Cross-Border Payments will become a $400 trillion industry by 2030; to put that into perspective, it was around $100 million in 2015. The growth is almost unprecedented but not unexpected. Experts observed the early signs of cross-border payments and predicted it to become a booming industry some time ago.
These are a few of the trends contributing to the increase in cross-border payments; the call for an efficient, secure and viable cross-border payment service is at its peak.
Any banking or financial system works in a closed-loop system. It is not designed to go out of the loop and circulates within the given space exclusively. Typically, the currency of a country at any given point circulates within the country only. It is not designed to flow through the economy of any other country. Therefore, currency or physical cash never travels overseas when an international transfer is made.
The traditional banking system worldwide works based on a bank in one country having a designated account allotted for foreign transactions only in another country; this enables banks to make payments in the currency of the required country. The funds are never physically sent over the border; the amount is debited from the sender’s bank account in one country and credited to the receiver’s bank account in another country.
The traditional cross-border payment system is not without its flaws; certain aspects of these payments cause a lot of friction. Some of these friction points are listed below:
The points mentioned above are a brief compilation of the redundancies in traditional cross-border payment methods. The issues associated with international payments have been discussed extensively, there has been a global collaboration to mitigate these problems.
In the G20 Summit 2020 held in Riyadh, enhancing the systems involved in cross-border payments was set as a priority. The goal was to design a system that would enhance the customer experience along with optimizing the effort and time it takes to complete an overseas transaction.
One of the key outcomes of the discussion was the need for automation. Experts argue that empowering the existing legacy systems with newer cutting-edge technologies would start mitigating the negatives of the traditional methods.
International money transfer is a budding industry with many services targeting the global money transfer market. Services such as RemitAll Software use state-of-the-art technologies to provide cross-border remittance businesses with a wholesome and hassle-free experience for their payment operations.
RemitAll Software aces the overseas payment game with various features, instantaneous payments, and 24/7 customer service. The organisation also has a registered bank account in the UK that enables foreign transactions seamlessly. RemitAll Software aims to inspire the financial ecosystem worldwide to embrace the digital wave and maximise the benefits of incorporating technology into the finance world.
The rise of fintech has made the banking world stand up and notice what technology can do to increase productivity and optimise the overall customer experience. The world is turning towards technology, and cross-border payments are no different.
The financial ecosystem has to deliberate over implementing blockchain technology into their legacy systems. Reaping the maximum benefits from these technologies can be tricky and must be handled carefully.
The advent and introduction of newer technologies into the traditional cross-border payment streams can unlock many unidentified benefits. The synergy between finance and technology might be slow due to various barriers, but it surely is moving in that direction.
To know more about the world of cross-border payments, contact us at connect@remitall.co.uk or book a demo with us contact us
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An ex-developer with a passion for writing. Skilled in Copywriting, Feature Writing, Social Media Posts. Started working as a content writer after spending 2 years with a tech giant as a software developer.
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