The past, present and future of cross-border money movement

Cross-border payments have seen substantial growth due to the increase in international trade, global workforce mobility, and remittances, with total global cross-border payment flows growing at around 9% (CAGR) annually¹. Visa’s latest Money Travels Report explores the trends and opportunities in the global $905 billion remittance market, while Visa Direct found that a staggering 771 million people made cross-border transactions between June 2023 and June 2024².

In this rapidly evolving landscape, banks are reassessing their operational models. They face increasing competition from neo-banks, digital first money transfer operators, and challengers in the SME space. In international P2P transfers new players have captured up to 65% of the market share³, and this trend is becoming apparent in the medium-size enterprise segment, that are involved in international trade. Furthermore, the volume of active correspondents in Europe has reduced by approximately 40%⁴ since 2011, prompting banks to rethink their strategies across all segments.

Banks are becoming more attuned to the diverse needs of their clients, which vary based on corridors, use cases, and target audiences. For instance, remitters generally prioritise ease and speed in the amount received in local currency, whereas businesses focus on managing multiple currencies and ensuring efficient accounts payable and receivable processes. To meet these demands, banks need to innovate while adhering to regulatory requirements, integrating tailored user experiences, and most importantly robust compliance frameworks.

Differentiating between Low-Value and High-Value Cross-Border Payments
While significant differences exist between low-value and high-value cross-border payments, the needs of different client types are converging. Low-value payments are often used for remittances, e-commerce, and small business transactions, and this is where innovation starts. Players evolve their offerings to meet consumer needs (e.g. real-time, transparency, local currency), and from there, this transformation extends to High-value (business) payments (e.g. faster, more efficient payments, better traceability and stablecoins).

Low-value payments face challenges such as the lack of standardised global payment infrastructure, often costly regulatory compliance, and limited access to financial services in developing regions. Regulatory compliance, particularly with international anti-money laundering (AML), know your customer (KYC) and know your transaction (KYT) requirements, can be challenging for smaller transactions. However, opportunities exist through global networks that provide speed, extensive reach and cost-effective connectivity, with Visa offering access to over 11 billion endpoints across 195 countries in real-time⁵.

Demands Driving Change in Cross-Border Payments
The rise of digital, cross-border, and real-time payments reflects changing consumer expectations. Consumers now expect to be more in control over their payment experiences, expecting simplicity, speed, choice, security, and cost transparency. These expectations have led providers to innovate, adopting real-time payments, enhancing interoperability, and utilising AI for efficiency and security.

Likewise, SMBs and corporates want payment providers to solve for high costs, low transaction speeds, limited transparency, and the risk of fraud. In addition to the shared pain points with consumers, SMBs and corporates also face limited value-added services, few integration options, and the inability to automate or set-up recurring payments. Corporates have the added challenge of managing currency risks and integrating with ERPs.

Whether it’s consumers, banks or fintechs, no one could have missed the dynamic changes we’ve seen over the last decade, from contactless payments to innovative new payment solutions such as digital wallets, stablecoins, and cross-border real-time payments. A decade ago, sending and receiving money across borders was cumbersome. They involved visiting a bank branch, authenticating with two forms of ID (usually passport and drivers’ license), long settlement times, and high transaction fees.

At the same time, there’s been an exponential rise of gig economy, a move from millions to billions of sellers. This means that global workers and nano businesses want faster access to their money, so the long-standing challenges in cross-border payments need solving.

With the increased mobility of people, goods, and services across borders, total cross-border payments are projected to reach $250 trillion by 2027, a $100 trillion increase from 2017⁶. This surge presents a significant opportunity for banks and fintechs to better cater to the evolving needs of consumers. A recent Visa Direct report gathered data from 6,500 consumers across 13 countries who had made a cross-border transaction in the past 12 months⁷. It found that consumers are spending more on cross-border transactions than ever before, but what’s really interesting is the frequency. 30% make weekly cross-border ecommerce purchases, 45% send or receive remittances monthly and 66% travel abroad annually. However, only 16% use a preferred ‘go-to’ payment method.

Trust remains paramount, with many consumers wary of potential fraud in cross-border transactions. Visa Direct addresses these concerns by providing the security and reliability that consumers, and businesses, expect. By offering unparalleled choice and embedding trust within the money movement journey, businesses of all sizes can future proof their success, driving growth for the wider economy.

Alternatives to Correspondent Banking
Both small and large banks find it difficult to stay connected and maintain correspondent relationships due to high operational costs driven by a lack of standardised security and compliance processes across corridors. With a global footprint, Visa’s compliance team leverages regional experts who provide localised insights and support to our worldwide operations, which helps clients make informed decisions. Banks also struggle with value proposition control, funds visibility, and economic viability, with each intermediary taking their share of the pie.

Digital assets, including stablecoins and tokenised deposits, are gaining traction. Visa is actively investing in these technologies, exploring innovative digital asset solutions for enhanced liquidity management and operational performance. Regulatory challenges remain, but the potential for digital assets to revolutionise cross-border payments is significant. Visa is involved in projects like Project Agorá⁸, exploring how tokenisation and unified ledger technology could improve wholesale cross-border settlement. Additionally, Visa Direct is a member of the European Payments Council, which aims to harmonise payments in the Single Euro Payments Area (SEPA)⁹.

Visa+ aliasing helps banks and money movement providers enhance their P2P services and make them more intuitive for users by mapping payment credentials to familiar digital identifiers such as phone numbers. This reduces the need for customers to share sensitive account details to send or receive money. This service supports both domestic and cross border transfers and is compatible with card and account credentials on and off Visa rails.

The deconstruction of the value chain
One of our core beliefs at Visa is that user experience is a central part of our clients’ offering and their differentiation. Our whole business is therefore built around being a platform provider on the back-end – and we have been successful with this approach over decades.

It is critical to allow clients to fully integrate our solutions into their existing user experience versus white-labeling products. This allows for a consistent end user journey and helps clients evolve as they react to customer needs. At the same time, we provide a wide variety of rails (card, account, wallet) – along with a full stack of value-added services (e.g. Visa A2A Protect) to make sure our clients can optimally manage risk and power world-leading UX, all with Visa’s proven reliability and security.

All this extends beyond just Money Movement – we have a lot of customers using the “full stack” of Visa capabilities, where our offering really comes together (e.g. card issuing, issuer processing, fraud & data solutions and Open Banking), providing a more holistic approach and suite of services.

The Future of Low-Value Cross-Border Payments
Looking forward, the cross-border payments ecosystem will be faster and tailored for different services, with a combination of networks (i.e. account, digital wallets and cards) delivering innovative solutions. The increasing prevalence of real-time payment systems and digital asset technologies will shape the future landscape. Visa is expanding its capabilities and regulatory coverage, investing in digital assets to enhance network efficiency and collaborate with governments and financial institutions.

Another example of this is wallet solutions, which are providing financial inclusion for the unbanked and underbanked, as they allow access to financial services without a bank account. We see the greatest potential for digital wallets in the remittance space, with $822 billion in annual cross-border remittances¹⁰. International remittances sent and received via digital wallets grew 33% compared to 2022, reaching $29 billion¹¹, and we expect these numbers to grow.

The successful operating model will balance innovation and security, maintaining trust with partners and regulators through robust compliance and risk management processes. Visa Direct is empowering corporations, financial institutions and fintechs to deliver domestic and cross-border transaction services that provide the ability to collect, hold, convert and send funds. A holistic solution that’s secure and powered by decades of cutting-edge innovation – driven by our mission to be the best way to pay and be paid for everyone, everywhere.