Mastercard’s (NYSE: MA) new borderless payments report reveals consumers globally are setting up side hustles and considering working or living abroad, prompting the acceleration of cross-border payments.
Small businesses are also increasingly “reliant on international payment networks with three in five sourcing more suppliers internationally than they were 12 months ago.”
Speed and simplicity seen “as primary drivers of businesses and individuals in managing their finances.”
Mastercard’s technology and scale enables consumers and businesses “to send and receive funds domestically and internationally to multiple payout options.”
As a growing number of people move overseas for jobs “that allow them to better support their families, remittances and cross-border payments play a key role of getting their money where they want it to go.”
Mastercard’s 2023 borderless payments report “shines a light on some of the challenges associated with cross-border payments and potential opportunities to address them.”
The primary remittance-related challenges “facing consumers and businesses include late or failed payments, the risk of fraud, and knock-on effects of being unable to support their own in-country payments.”
The report is based “on the views of over 11,000 consumers and small businesses across 15 different markets in the Americas, Europe” and other world regions.
Global job market fueling demand
Over the next three years, 50% of people who “have made a cross-border payment in the last year say they are now considering living and working abroad.”
The growing number of people “in overseas work has, as a result, fueled an increase in cross-border transactions, with many respondents expecting to make more payments over the next 12 months (41%) and at higher value (46%).”
They included a few key factors when determining “how to send their money home –level of the fees, speed in delivery and simplicity in the experience.”
The report also reveals “the critical importance of cross-border payments to small businesses. Three in five (61%) small business respondents say they are now sourcing more suppliers internationally than they were 12 months ago, and two in three (65%) say they expect to source more abroad in the coming year.”
Solving for the pain points in cross-border payments
This growth in international remittance options – “each with different features and guarantees – has delivered a mixed experience for individuals and businesses, with a third of consumer respondents (32%) and nearly four in ten (37%) small businesses having experienced a failed or late payment.”
About half (47%) of those businesses “who experienced a late or failed payment say the experience has made them far less confident using cross-border payments. As a result, 46% of these small businesses say they now opt to use domestic suppliers instead even if the cost is higher.”
The potential for fraud remains “a concern when sending money both domestically and internationally.”