The future of cross-border payments may well be headed in the direction of cryptocurrency, as 41 per cent of cross-border payment startups are leveraging the use of cryptocurrencies. Data comes from FXC Intelligence, the cross-border payments data and intelligence firm, which has launched its latest report looking at the sector.
FXC Intelligence found that the number of cross-border payment startups specifically catering to business customers has been growing much faster than those serving consumer customers. Overall, 74 per cent of the companies it analysed catered primarily to businesses, while just the remaining 26 per cent primarily focused on consumers.
While B2B cross-border payments emerged as the most common focus, many instead provide services to enable businesses to interoperate between fiat and cryptocurrencies – either to accept payments from customers or to interact with crypto-facing businesses and operations. Forty-one per cent of the startups had some form of crypto product.
This could be influenced by the current market climate, as companies that had some form of crypto as part of their offering were more likely to have received funding. In fact, 57 per cent received funding, compared to just 39 per cent of companies which did not boast a crypto-related product.
Similarly, business-focused companies were also more likely to have funding, with 53 per cent of such companies having raised money compared to just 27 per cent of consumer-focused companies.
The startup profile that was most likely to have received funding was business-focused companies with a crypto product, at 59 per cent, while the profile least likely to have received funding was consumer-focused companies with no crypto product, at 19 per cent.
“A snapshot of how the industry may evolve”
Lucy Ingham, editor-in-chief and head of content at FXC Intelligence, said: “We’re interested in analysing these startups because it provides a snapshot of how the industry may evolve in the future.
“Although it isn’t a complete picture of the future of payments, it does indicate the makeup of new companies that will help the industry grow moving forward.
“By observing the issues these startups are focused on solving, we can glean useful insights into how the industry is developing, including the innovations and technologies that will shape the future of how money moves and the key macro challenges the industry is looking to overcome.
“There are indications that the main area of growth in the industry will be on the business side of payments, which is strengthened by the strong growth rates of more established players in this space.”
Following crypto interoperability, the next two most common focuses centred around improving processes for either business customers or consumer customers, with many companies focusing on specific niches.
This includes improving services in emerging markets and making doing business on particular corridors cheaper or more efficient on the business side, while on the consumer side, this includes tackling financial inclusion and reducing friction to send payments.
This focus is similar to many more established businesses in the space and reflects the breadth of process improvement opportunities within the cross-border payments industry globally. Many of the companies focusing on this area are located in areas of the world that have traditionally been seen as a lower priority or too challenging due to market size, local infrastructure or market maturity.