The cross-border payment landscape is undergoing a significant transformation, driven by the rapid growth of e-commerce, freelancing, and travel in emerging markets. According to a new report, these sectors are expected to drive growth in cross-border payments, particularly in Africa, where small and medium-sized enterprises (SMEs) are increasingly relying on cheaper solutions to pay suppliers internationally.

The report, titled "Emerging Trends in Cross-Border Payments: A Growth Guide for Stakeholders," highlights the opportunities and challenges in this space. E-commerce platforms like AliExpress, Shein, and Temu are simplifying cross-border payments, breaking down barriers for buyers globally, including in Africa. Freelancing and remote work are also reshaping global hiring, with US and European companies hiring from Africa's talent pools, driving demand for effective cross-border payroll systems.

Travel and tourism are also booming, with tourists seeking payment options that work seamlessly across borders. This demand is expected to continue growing as travel becomes more accessible. International trade is another significant driver of cross-border payments, with SMEs sourcing goods internationally relying on cheaper solutions to pay suppliers, especially in China and other global hubs.

However, the report also highlights the challenges faced by individuals and businesses in Africa, where remittance fees often exceed 8-10% of transaction values, far above the global average of 6%. To address this challenge, companies can focus on technology, partnerships, and government collaboration. For instance, blockchain-based digital assets like Bitcoin and stablecoins provide a more cost-effective way to transfer money by reducing traditional processing fees.

Digital wallets and mobile money platforms like M-Pesa in Kenya and Paga in Nigeria reduce dependency on banks, allowing funds to be sent directly to recipients. This reduces costs and improves accessibility. Regulatory bottlenecks and high taxes contribute significantly to remittance costs, and companies can work with governments to advocate for reduced transaction taxes, streamlined licensing for money transfer operators, and policies that encourage open financial ecosystems.

Serving the underbanked with cross-border solutions is another significant opportunity. Underbanked and rural populations represent a largely untapped market for cross-border payment solutions, especially in emerging regions like Africa. Solutions designed for small-scale transactions and local currencies can help reduce barriers, making international payments more accessible and less intimidating.

Infrastructure and cross-border payments are also critical. Domestic payment rails form the backbone of any cross-border payment journey. Globally, systems like NIBSS (Nigeria Inter-Bank Settlement System) in Nigeria, PIX in Brazil, and UPI in India enable instant local transfers. When these domestic systems are optimized and connected to cross-border networks, they reduce friction, improve speed, and improve reliability.

Partnerships are also essential in expanding cross-border payment networks. Strategic collaborations allow companies to leverage local expertise and infrastructure, helping them efficiently scale their offerings to new markets while navigating complex regulatory ecosystems like anti-money laundering (AML) and Know Your Customer (KYC) requirements.

In conclusion, the report highlights the significant opportunities and challenges in cross-border payments, particularly in emerging markets. As e-commerce, freelancing, and travel continue to drive growth, companies must focus on technology, partnerships, and government collaboration to address the challenges and tap into the vast potential of cross-border payments.