Cross-border e-commerce
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Borders Must Not Hinder the Movement of Money

by Kate Goldfinch, Associate editor at The Fintech Times, Future magazine founder

The global cross-border market is figured to be worth $20 trillion – with estimates for global markets in education and medicine pegged at $800 billion and $500 billion, respectively. Education, medicine, and travel are the key drivers of international mobility and global payments.

According to McKinsey & SWIFT, the market has some key niches although most revenue is concentrated in the B2B sector. Today, cross-border trade is at the epicentre of specific trends that are substantially changing competitive dynamics – the increasing pressure from new technologies (including decentralised technologies – DLT – and innovations in card-based and network businesses); side-stepping of regulations and sanctions barriers; development of international commerce (both retail and corporate); and most especially, changing consumer demand. Over and above all this, new players in cross-border markets (such as TransferWise, Alibaba, and Facebook) are piling the competitive pressure onto the established players.

Even though income from cross-border transactions remain pretty high, the ongoing dynamic of change in consumer behaviour, alongside the appearance of new market players, increases pressure on the most stable segments of the market.

Cross-border e-commerce is a separate field of research. According to McKinsey & SWIFT, retail cross-border e-commerce sales totaled $300 billion in 2015 and are poised to exceed $900 billion by 2020, representing a 25 percent annual growth rate. Currently, one-fifth of these transactions involve high-ticket orders (over $200), although this is trending downward as casual online purchases (e.g., $5 staples) become more commonplace. Throughout 2018, we saw a dynamic industry continuing to break new ground in transaction tech and poised to grow at rates even greater than 25 percent. 

However, much of the C2B cross-border market remains characterised by complexity—for example, a lack of familiar local payments options on international websites—as well as limited infrastructure and lack of transparency on foreign exchange fees. 

Cross-border e-commerce is a separate field of research. According to McKinsey & SWIFT, retail cross-border e-commerce sales totalled $300 billion in 2015 and are poised to exceed $900 billion by 2020, representing a 25 percent annual growth rate.

Non-traditional firms offer digital solutions that provide a seamless experience, putting pressure on incumbents to improve. For example, Uber and Lyft let business travellers use charge codes for expense reimbursement rather than card settlement. Cross-border e-commerce is not the only C2B payments category with double-digit growth rates. International bill payments— for items such as tuition, rent, or subscriptions—are growing substantially, as they remain hard to manage if not facilitated from an “in-country” bank account. The same is true for loan repayments (for instance, the mortgage on a second home abroad) or investments.

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