Let’s face it: the world is a lot smaller than many care to realise. Globalisation has totally redefined commerce, and multinational businesses are exceptionally reliant upon international sales, accessible markets and the availability of secure, global supply chains in order to trade successfully – which is why those same businesses are equally reliant upon their ability to conduct frictionless, cross-border payments whenever and wherever necessary.
Unfortunately, a fresh crop of multijurisdictional regulations, innovating fraudsters and extreme socio-political uncertainty across some of the globe’s biggest markets have created an exceptionally difficult environment for payments providers working to facilitate international payments, as well as the organisations that depend upon their services. That’s why dealing with global payments can still be a fairly expensive and logistically challenging process for many organisations and their treasury teams – and it’s also why supply may finally catch up with demand in 2019 where affordable and innovative solutions are concerned.
So, what changes are on the horizon for cross-border payments in 2019?
First and foremost, incumbent vendors and payments start-ups appear to be turning their attention to emerging or illiquid destination currencies, and are already piloting new products designed to facilitate payments in historically adverse markets. Cracking these illiquid currency markets will be one of the quickest wins for payment providers in the months to come – and as one might predict, a huge proportion of these new cross-border solutions are powered by distributed ledger technology. Similarly, the biggest projects on the horizon all appear to be reliant upon extensive international collaboration.
At the start of January, Telenor Microfinance Bank announced the launch of a new blockchain-powered payments platform designed to facilitate faster, frictionless payments specifically between Pakistan and Malaysia. The remittance platform is designed with underbanked communities in mind and uses a dynamic mobile payment portal built by Chinese payments giant Alipay to assist in building upon the Pakistani government’s five-year plan to bolster financial inclusion and offer alternative pathways for small international businesses. This partnership is admittedly only a drop in the water for global businesses looking for easy ways in which to enter new markets, but it’s symptomatic of a wider trend singlehandedly guiding the natural evolution of cross-border payments.
Similar initiatives focusing on promoting frictionless cross-border payments across a relatively small number of jurisdictions have also been announced this month, including an agreement between Saudi Arabia and the United Arab Emirates to develop and pilot crypto-currency designed to facilitate money transfers between the two countries. Meanwhile, the National Bank of Kuwait announced a new partnership at the end of December that will see a new blockchain service introduced enabling banks to instantly settle payments with end-to-end tracking via negotiated access to the Ripple xCurrent service.
As a matter of fact, Ripple has enjoyed a phenomenal year of growth over the course of the last twelve months, and in January the enterprise blockchain solutions provider announced partnerships with 13 new financial institutions – bringing its widely growing payments network up to 200 corporate customers.
But Ripple isn’t the only big player in international payments getting involved in new cross-border projects this year. Payments giant Visa is reportedly in the process of purchasing the London-based payment network Earthport for £198m in a bid to expand its widening pool of distributed ledger technologies. The implications for Visa’s sprawling global network could be huge.
The award-winning Earthport uses a single API in order to connect banks to Ripple’s distributed ledger protocol when processing cross-border payments, enabling banks and money transfer services to maintain a single relationship instead of multiple ties via a gaggle of global channels. Earthport already counts Bank of America Merrill Lynch and Japan Post Bank among its list of clients – and because cross-border payments are a rapidly growing business for Visa, the acquisition could see an already major provider extend a new range of affordable, blockchain-powered payments services in 2019.
Finally, for those vendors and institutions looking to develop their own bespoke products, UnionPay International announced earlier this month that it had rolled out its new open UPI Developer platform – which will enable developers to create their own custom applications benefitting from built-in access to UnionPay’s 18 cross-border mobile payment products.
UnionPay isn’t the only payments provider looking to expand its cross-border network through extending access to APIs, either. Last week, JETCO celebrated the launch of Hong Kong’s first-ever API exchange, providing developers with more than 200 APIs from 13 banks with a view to bring new cross-border solutions to market at a much faster rate and heavily reduced cost.
If the flurry of activity that’s taken place over the last few weeks can serve as any sort of indicator of what’s in store, cross-border payments are indeed right on track to undergo a serious makeover in 2019. Between a fresh stream of open APIs, the establishment of new distributed ledger platforms and the expansion of existing payments networks, the massive investment being placed in the cross-border payments space should create a user experience and treasury function that is quicker, easier and almost totally frictionless.