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, the Middle East, Africa and Asia Pacific.
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, with particularly high numbers in India (72%), South Africa (71%), Colombia (69%) and the Philippines (66%).
The growing number of people in overseas work has, as a result, fuelled 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. The report reveals people are more likely to have been a victim of domestic payment fraud (23%) than cross-border (17%), yet the struggle to get money returned from both types is evident. Two-thirds of people who were a victim of domestic (66%) and cross-border (71%) fraud said they received either some or none of their money back.
Alan Marquard, Executive Vice President, Transfer Solutions, Mastercard, said: “The past few years have proven that our global economy depends on seamless connections — of people, raw materials, goods and services. Among these important connections, the ability to make and receive payments quickly and easily is crucial, but failed, late and fraudulent payments risk undermining trust in these crucial networks. We must come together to enable money to move more safely, simply, reliably and transparently.”
Mastercard’s technology and innovative solutions enable its customers to move money and data quickly and securely, both domestically and internationally. Its suite of remittance-related products enables payments using Mastercard’s global network to be delivered to bank accounts, digital and mobile wallets, card, and cash across more than 180 countries and 150 currencies. In total, these services provide senders with access to more than 90% of the world’s banked population and in near real-time to more than 50 markets.
The full Mastercard Borderless Payments Report 2023 is available here.