What were the most relevant, disruptive, but here-to-stay trends impacting cross-border payments in 2022?
The collective experience of COVID-19 has transformed shopping and payment behaviors around the world, particularly with an accelerated shift toward online purchases. Global e-commerce grew from 15% of total retail sales in 2019 to 21% in 2021, and Juniper Research expects continued growth, driven primarily by the success of digital marketplaces.
In these digital marketplaces, shoppers may not even realize if the store they are shopping at is around the corner or across the globe. With fewer restrictions on where, when and what to buy online, the rise of e-commerce is largely international in nature. According to Juniper Research, the value of cross-border e-commerce is expected to top $2.1 trillion in 2023, up from $1.9 trillion in 2022.
The increase in cross-border e-commerce creates opportunities for merchants in multiple markets. Findings from Mastercard’s 2022 Borderless Payments Report show that just under half (47%) of small businesses are doing more international business than before the pandemic, while 43% of consumers say they have sent money abroad to purchase products from the UK to buy abroad. However, there is still room for improvement when it comes to cross-border payments.
The promise of borderless trade is complicated by the poor connectivity and consistency between domestic payment schemes and schemes. This is one way Mastercard can help. Our gateway services provide simple, secure connectivity to multiple systems to rapidly increase digital adoption, particularly in emerging and growth markets. With a global network of over 200 acquirers – from Singapore to Canada and countries in between – offering local acceptance and comprehensive payment methods, our single connection can help payment processors reduce cost and complexity while meeting local payment needs.
Which markets are characterized by greater use of digital payments for cross-border e-commerce in the last 12 months?
We have seen significant cross-border e-commerce growth in intra-regional corridors. We might surmise that this is due to the relative ease with which a retailer can scale its business into nearby markets that share more common ways of doing business and have similar consumer requirements, as well as simpler delivery logistics.
We’ve also seen significant cross-border e-commerce growth from emerging markets, which often lack the established payment infrastructures of their more developed competitors. To meet the needs of merchants in these markets, Mastercard has developed a range of cloud-based trading solutions that lower cost and hardware barriers to entry, such as: B. Click-to-Pay, Hosted Checkout and Tap on Phone (QR and online). These solutions are able to accept locally relevant payment methods such as digital wallets.
Going forward, we will focus on developing digital payment solutions to meet the needs of emerging industries such as subscription payments for media providers and payments for workers and makers in the ever-expanding gig economy. Additionally, as consumer demand for “buy now, pay later” continues to grow, we leverage our network to help merchants offer safe, responsible and convenient installment payments.
A transition to online trading can, in some cases, lead to an increased potential for fraud. How is this trend affecting consumers? What about companies?
The risk of fraud increases with the growth of online commerce and the emergence of new payment options, compounded by the complexities of sending and receiving money internationally. This can put consumers off – 42% fear they may be victims of fraud when making cross-border payments.
Businesses have a responsibility to protect customer data and strike a balance between experience and security. This is a key tension point, as customers expect convenience without disruptive fraud prevention tactics, and rejecting a customer poses a reputational risk. But there are rewards on offer as customer satisfaction is greatly increased when companies respond well to scam experiences.
More than ever, customers need service providers who can help them navigate the emerging payment trends and offer best-in-class, value-added services. With a wealth of cybersecurity solutions, we offer partners new fraud prevention solutions in all regions and markets, such as: B. Brighterion, which uses machine learning capabilities to reduce false positives. Meanwhile, we’re pioneering advanced tokenization to protect consumer data and new EMV3DS 2.0 standards to streamline and secure authentication.
Trusted and globally recognized, Mastercard’s brand and franchise provides consumers with security to break through consumer psychological barriers.
What steps can payment providers take to accelerate the growth of cross-border payments and meet the needs of consumers and businesses around the world?
Changing business models and changing consumer expectations mean a demand to connect more payment methods across more sales channels and markets. Payment service providers faced with this triple challenge may struggle to navigate the increasingly fragmented payments landscape. They need to expand their reach while supporting all major payment methods on the market.
Even as unicorn players gain serious market share, heritage players remain an important part of the global infrastructure. Traditional banks play an important role in making cross-border payments faster, cheaper and more connected.
Globally and regionally, businesses must navigate regulations, protocols and consumer payment preferences. Mastercard has been a leader in payments for more than 50 years. Our unrivaled global connections give us a local presence on a global scale to help merchants and payment processors meet the challenges and opportunities of increasing cross-border e-commerce now and for years to come.
This editorial was first published in The Paypers’ Cross-Border Payments and Ecommerce Report 2022-2023, which unlocks the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are crucial in this space, providing the ultimate source of information for e-commerce Commerce companies interested in global expansion.
About Maria Parpou
Maria Parpou, Executive Vice President, Mastercard Payment Gateway Services, leads the gateway business in over 100 countries. She joined Mastercard in 2022 and brings over 25 years of diverse payments experience including consulting, mutual fund administration, commercial payments and leading e-commerce solutions.
Via Mastercard Payment Gateway Services
The Mastercard Payment Gateway is an acquirer-neutral gateway with connectivity to more than 190 acquirers around the world. We offer an API-driven gateway platform, Mastercard’s knowledge and experience, and a single connection to a growing catalog of Mastercard products and services. We offer our partners the Mastercard difference: proven technology, a sense of security and experience in payment transactions.
