As the payment landscape continues to shift – driven by an increasingly global economy, the adoption of more digital-only channels, and increased concerns over security and transparency – there are likely to be more and larger cross-border payments, predicts a tech group chief executive.
Mike Massaro, CEO of Boston-headquartered cross-border payments software provider Flywire, says that the future for global payments is likely to be marked by five areas to watch in 2016 and coming years.
The emergence of a new “global citizen” demographic:
Today, there are more people transacting across borders in larger sums than ever before. This group does not feel bound by borders in terms of lifestyle, access or travel. Members are spending increasing amounts on goods and services outside their home countries, resulting in dramatic growth in cross-border payments – for education for their children, for medical care, for real estate and for other offerings. Businesses looking to appeal to this growing and affluent segment must take steps to reduce the friction in today’s cross-border payment process.
An Increasing preference for digital channels for large cross-border payments:
As large, cross-border payments become more common, consumers are looking for the most convenient, cost efficient and transparent options. This is driving more of these transactions to web and mobile channels versus traditional agent-based and bank-based options. Web and mobile channels offer the ability to track payments instantly, confirm receipt and better understand the fees involved. The traditional agent-based model, while still sizable, will continue to diminish in importance as Millennials and GenXers gain affluence. Banks are already being forced to consider new forms of service delivery, as legacy models and fee structures diminish in relevance for younger segments who do not consider themselves bound by the banks their parents patronise.
A stronger focus on compliance and transparency with the threat of terrorism:
With ever-increasing terror threats and the focus on cutting-off financing sources for nefarious acts, we can expect to see a much greater emphasis on transparency and compliance. Any entity processing large, cross-border payments will need to be able to verify sources and recipients with increasing precision and certainty; ensure strict compliance with anti-money-laundering (AML) laws; and be able to provide detailed transaction reporting.
Increased demand for support services related to cross-border payments:
Entities accepting large, cross-border payments in any significant volume will also need to be able to provide ancillary support services related to those payments. With consumers from around the world making large payments in different time zones, 24×7, multi-lingual, omni-channel customer support – including phone, email, chat, text and social media – becomes essential.
Significant growth in large cross-border payments in two specific markets:
Education – in 2014, 4.5m students from around the world attended schools internationally according to the non-denominational mission Open Doors. That number is expected to grow to 8m by 2025. In the US alone, almost 1m international students from 220 countries spend an estimated US$27bn in tuition and living expenses. It’s a big business – and getting bigger every year.
International Patient Care – Patients Beyond Borders, the medical tourism guidebook, estimates that the worldwide market for international patient care (aka “medical tourism”) is at US$40bn today, and growing at a rate of 15-25%. Patients are traveling abroad from all over the world for access to more affordable procedures, shorter wait times, and the latest advancements in medical care.
“Cross-border commerce and money movement is complex but as the world becomes more global, it’s essential that we remove the barriers that exist in traditional channels,” said Massaro.
“As we do, the volume of cross-border money movement will grow and open up tremendous opportunities for businesses, institutions and consumers around the world.”
Credit ratings agency Fitch has issued an update on the use in Europe of repurchase agreements, aka repos, by money market funds.
Individuals and corporates can now make instant euro credit transfers between accounts across a region that will be extended to over 34 European countries.
While headlines are dominated by major data breaches and, more recently, by audacious Distributed Denial of Service (DDoS) attacks, it is encryption ... read more
The European Union’s endorsement of the financial reporting standard means that companies can no longer delay action, warns Reval.