NEW YORK—Real-time cross-border payments are gaining significant momentum as global consumers increasingly rely on them for seamless transactions, a new study shows.
“Many consumers rely on them to send money to family and friends, while others use them to purchase goods, underscoring their growing importance in the international economy. However, despite the progress, challenges persist in meeting G20 targets for speed and efficiency across key markets,” said GlobalData.
GlobalData’s 2024 Financial Services Consumer Survey reveals around 63% of global consumers use international real-time payments services to send money to family and friends and 51% use them only to pay for goods and services.
According to GlobalData’s Payment Instrument Analytics, the total volume of cross-border transactions in Europe alone will increase by 58% between 2023 and 2028. The G20 roadmap for enhanced cross-border payments aims to improve the speed, access, transparency, and cost of international payments by 2030. In its most recent update in October 2023, the Financial Stability Board reported a shortfall against G20 targets in the proportion of retail services that make funds available to the consumers in an hour (42% vs target of 75%) and in one business day (76% vs target of 100%).
Better Than Traditional Methods
“Not only are real-time payments considered superior to traditional methods because of their speed, but these services are typically available 24/7, reduce transaction costs, and ease liquidity management for businesses,” said Stephen Walker, lead banking and payments analyst at GlobalData. “They also represent the next major step for cross-border payment services, as the volume of cross-border payments also ramps up over the coming years.”
Several international initiatives, such as “Immediate Cross-Border Payments” developed by The Clearing House in the U.S., EBA Clearing in Europe, and SWIFT, are being developed to establish a 24/7 USD-EUR payments corridor to improve cross-border payments, GlobalData said.
“As these developments and initiatives continue, the tradeoff between the ease of creating multilateral channels and the scalability of a truly global system will get harder to overcome,” Walker said. “The failure of pan-Nordic initiative P27 illustrates the challenge of collaborating on and executing the vision of a cross-border settlement scheme across jurisdictions. The push for digitalization of consumer payment methods will be key in driving down costs and improving transfer speeds.
“Simplicity and speed of the transfer process is the most important factors for consumers when choosing a cross-border payment provider,” added Walker. “While progress has been tangible, there is scope to improve these measures and further reap the rewards from delivering these services.”