15 trends shaping cross-border payments in 2024
Cross-border payments is set to see a year of development, change and evolution in 2024. Here are some main trends shaping the space in 2024.
While 2023 was a significant year of change following the economic and geopolitical downturns of 2022, 2024 is set to be a year of evolution for cross-border payments. Over the next year, we are set to see the global payments landscape shift and develop in response to factors that have long been in motion.
For this year, we found that our predictions fit into three main categories: geopolitical and social trends, technological advances and industry evolution. All three are providing powerful shaping forces in cross-border payments, which are producing sectoral and at times region-specific developments that together are slowly changing the shape of the ever-maturing industry.
Here we look at the five main trends in each of these categories, providing 15 predictions for cross-border payments in 2024.
Geopolitical and social changes shaping cross-border payments in 2024
2023 saw geopolitical turmoil and 2024 is only set to continue this, with significant and widespread impacts on the global payments system. A greater percentage of the global population than ever before will be migrants in 2024, while increasing numbers of small and medium-sized businesses will look beyond their own borders for growth. Meanwhile, intergovernmental agreements and a shift away from the dollar will also play a role.
Transparency in the spotlight
Transparency is set to be a critical watchword for 2024 as the industry begins to engage further with the G20’s Roadmap for enhancing cross-border payments – and more critically the targets it needs to meet by 2027. Last year, the FSB published the first benchmarking data on this – much of it supplied by we here at FXC Intelligence – showing the industry has some way to go to reduce costs, increase speed and increase access. With more data on cross-border payments available than ever before (speak to us to find out how we can help meet your data needs), expect the industry to place an increased focus on operating with insight and transparency.
De-dollarisation and evolving corridors
The last few years has seen a sharp shift away from the dollar in many markets, particularly in China and Russia and among their key trading partners due to trade embargoes, as well as among countries that have suffered from the strength of the dollar in the last few years. This, combined with evolving responses to trade demands, has helped start an ongoing shift in key trade corridors. As a result, formerly exotic currency pairs have become more normal, while in some parts of the world the dollar is being actively moved away from. Add in the expansion of the BRICS bloc, and it seems likely that we will continue to see a shift away from the dollar and towards formerly unusual currencies, creating renewed challenges for cross-border payment providers.
Closer cross-border connections
Over the past few years, multiple countries have linked their financial systems to increase their cross-border interconnectivity and so enable fast, low-cost payments on common regional corridors. In Africa, PAPSS is increasing connectivity on the continent, while Singapore has connected with several key corridors – including Thailand and India. However, there are far more connections to be made, and in 2024 we can expect further launches and announcements. One to watch closely is India’s addition of US dollars to its mobile payment system UPI, which was first proposed in December 2023.
The further rise of cross-border SMEs
Small and medium-sized businesses around the world are increasingly accessing international markets, particularly in areas such as ecommerce where the tools to access global and regional marketplaces have become increasingly sophisticated, including through virtual cards and multicurrency accounts. B2B and B2B2X-focused players have increasingly been waking up to the potential of the SME market, and in 2024 we can expect more products and more businesses to embrace this potential, particularly in emerging market hubs around Latin America, Africa and Southeast Asia.
Payments’ environmental challenges
The December 2023 United Nations Climate Change Conference (COP28) agreement brought discussion of industry and nation-level action on climate change back into focus, and while we have a long way to go before this becomes a central theme, we do expect some increased discussion in payments over the next year. Simply put, the true environmental footprint of the world’s payments system is not known, but it is likely to be significant – particularly when you consider the inclusion of KYC and fraud-related systems – and with ever more digitisation, it is growing. Expect more discussion of this in 2024, and in years to come.
Technological advances shaping cross-border payments in 2024
Cross-border payments has long benefited from advances in technology and 2024 will be no different. While some areas remain relatively stable, developments in other areas are beginning to have an impact that will only grow in the coming year. Crucially, this is as much about the use of technology as it is about the innovation itself – and this year we can expect the industry to increasingly engage in a broad range of technologies – from AI to crypto and beyond.
Faster payments come into focus
Delivering faster payments has long been a focus across the space, but in 2023 this stepped up significantly, in part driven by increased technological capabilities as well as renewed expectations from a variety of customer types. In 2024, we expect to see this increase further, particularly on the B2B side where there has been traditionally less importance placed on the speed of payments. This is partially set to be driven by increased capabilities, particularly as the market for partnership-led solutions becomes increasingly competitive, however it is also being driven by growing customer expectations, as consumers expect to see their business payments match the capabilities of their personal equivalents.
CBDCs gain attention
Central bank digital currencies have been in development by various groups for some time, initially prompted by the existential crisis Facebook’s now-abandoned Libra project prompted for central bank cross-border payments. However, while they are some way off being implemented on a large scale, they continue to see significant exploration and development, and in Asia in particular are seeing growing interest and support. Expect to see some significant announcements in this space over the coming year.
Generative AI in payments
It’s an obvious prediction for 2024, but with good reason. While 2023 saw companies around the world scramble to explore generative AI products such as the recently launched ChatGPT, 2024 is where we find out how the technology can truly provide benefits for the industry. Expect to see applications begin to emerge for both internal operations and external-facing customer duties, although with much about the space still being tested, we are unlikely to avoid a few gaffes too.
QR codes see new interest
Enabling anyone to quickly take a payment anywhere with phone signal, QR codes have long been popular in some areas of the world, including China, thanks to their low barrier of entry and simplicity to use. However, we have begun to see their use for payments spread further afield and in 2024 we expect to see more regions embrace the humble QR code for payments. In Western nations in particular, expect to see more developments on this over the next year.
Payment processing finds new frontiers
The advent of the Web provided new opportunities for payments – and, crucially, payments processing – that hitherto had not even been considered. Since then, we have had other advancements, from in-app and in-game purchases to live ecommerce and social media gifting. In 2024, as a variety of technologies and platforms evolve, we expect to see and hear more about new frontiers for payments. From augmented and blended reality-based interactions to streamed payments (where money is sent continuously in a manner similar to streaming a video), there are a wide range of technologies poised to create new possibilities for the space. While some may fail to catch on, others are likely to emerge this year off the back of new social trends and technologies, particularly as the world looks to increasingly blend the virtual and the physical.
Industry evolution: 2024 changes predicted for cross-border payments
The last decade or so has seen the cross-border payments industry go through significant development and maturation, and in doing so there have been significant power shifts and developments within it. While much of the industry, particularly on the B2B side, is still in the rapid development phase, 2024 is likely to see some major developments in industry practices, trends and factors, from the reemergence of banking to a shift in company structures for some.
Consolidation, spinouts and rebrands
The past year has seen an increased focus on profitability and cost-cutting, and for some this has included taking a renewed look at business structures to improve the bottom line. While consolidation has been key for the fragmented B2B payments space, some companies across cross-border payments are now looking at spinoffs. FIS, for example, has already begun the process of spinning off Worldpay, while Fleetcor’s Corpay is exploring ways to separate the company from its parent. 2024 is unlikely to be a big year for IPOs, as key players such as Nium remain a few years off this goal, but we do expect to see these more novel shifts in structure and presence become more common. Players with shorter runways may also run into trouble this year unless there is a marked change in the funding climate, further increasing consolidation.
Banking’s B2B fightback
Over the past few years, we have spoken to many CEOs of B2B cross-border payments players, and when we ask them where they get their customers from, every single one has told us the same thing: banks. Banks are the biggest source of new customers to non-bank B2B payments players, and for many it is because the banks have not been focused on this area. However, we expect this to change in 2024. More and more banks are exploring strategies to economically service the smaller end of the B2B segment (and using our data to improve their strategy in this area), and we expect a stronger response from the banking industry this year.
Scale becomes critical in remittances
The consumer remittances market has demonstrated enormous resilience over the past few years, although few players have reached a scale to make an impact. A slow changing of the guards has seen the sector shift increasingly towards digital, as leading companies explore one of two main strategies: digital-first or omnichannel. For MoneyGram, this has involved going private to shift focus away from the quarterly earnings cycle, while for Western Union it has involved a challenging few quarters and a recent outpacing on digital. In 2024, we will get much stronger signs of how the market is set to evolve in the future, and which of these two strategies will ultimately dominate, particularly when it comes to its biggest players.
B2B ecommerce gains attention
While consumer ecommerce is long-established, B2B ecommerce is newer and less developed. However, in 2024 we expect to see significant growth and development, particularly on the cross-border side, as offerings in this space become more sophisticated and more businesses embrace the potential. Our own market sizing data shows that cross-border B2B ecommerce is expected to grow by 120% between 2023 and 2030 to reach a total addressable market of $22tn by 2030 – and 2024 will be a critical year for this growth.
Cross-border gifting grows
While the practice of sending money home hasn’t changed significantly in decades, we are seeing the rise of a new type of company in this space that is set to gain significant traction in 2024: those who handle cross-border gifts. Rather than simply enable customers to transfer money to their friends and relatives abroad, these companies allow them to purchase specific goods and services across borders. These range from a small treat, such as a drink or meal, up to major purchases such as vehicles, school fees or doctors bills. While only a small percentage of the flows in this space are present, we anticipate this area growing significantly as the key gifting players develop.
