Who would have thought that in just two years, cross-border payments will reach an estimated $250 trillion annually[1]. For context, it was $150 trillion in 2017, so an increase of $100 trillion in just 10 years.
There are three main reasons the cross-border payments market is experiencing such growth. Firstly, it is fuelled by a surge in international travel post Covid-19. Secondly, online shopping and global e-commerce platforms are booming as consumers continue to look online for products and, thirdly, remittances - money sent by people working overseas to their home countries.
To better understand the behaviour of consumers and their cross-border habits, Visa Direct has produced its 2025 Global Cross-Border Consumer Habits – a survey of 6,500 consumers from 13 countries and territories, including Australia.
Visa Direct estimates that a staggering 771 million people made cross-border transactions between June 2023 and June 2024. The survey found 30% make weekly cross-border ecommerce purchases, 45% send or receive remittances monthly and 66% travel overseas annually.
Despite the many options currently available, 67% of those surveyed would prefer more options. This is especially important to consumers in the Philippines (88%) and Mexico (82%) but less so in countries such as Sweden (53%), United Kingdom (53%), and France (52%). Australia was at 59%.
Gen Zers (84%) were most likely to make a cross-border transaction compared with 68% of Baby Boomers.
The report says the industry is at a critical stage with traditional cross-border payment methods being slow, expensive and lacking transparency. “There is no need for that to be the case anymore.”
It predicts competition will ramp up as banks and fintechs take the opportunity to be consumers’ favourite cross-border payment method.
Interestingly, the report showed that consumers don’t have a favourite way to pay. They are using an average of four out of seven different methods (digital payment services, credit or debit cards, P2P services, bank or wire transfers, online money transfer services, prepaid travel cards or money orders), with only 16% using a default payment method.
“Most of us form habits to make routine decision-making easier and quicker, but we found that for cross-border payments this hasn’t yet happened,” the report found. Although 66% of consumers want to form habits, 71% want more guidance and education to better understand the best option. It seems no single provider offers what
consumers need for cross-border payments, despite almost 80% using a traditional bank.
“One thing consumers are clear on is they want a cross-border payment provider that is secure and trustworthy. 90% expect stringent fraud and security measures to be in place, with 75% of Gen Z having halted cross-border payments due to security concerns.”
When choosing a cross-border payment solution consumers said security (63%) was their main priority followed by trust (51%), reliability (49%) and fees (49%). Across all the different types of cross-border transactions, security is consistently the top priority across all regions, and among those engaging in travel (63%), ecommerce (62%), and remittance (59%) transactions.
The report said that about two in three consumers say the fear of fraud has stopped them from using a cross-border payment option. A higher percentage of Gen Z and Millennials, 76% and 71% respectively, have stopped a transaction on suspicion of fraud compared to Baby Boomers at 52%. Historically, older generations have built trust in their traditional bank, whereas younger generations are more casual in their choice of cross-border payment provider, some of which may be newer market entrants and therefore haven't built up that trust.
The fintechs and banks that use secure payment platforms (like Visa) can offer consumers the payment experience they want, with reassurance already built in.
Breaking down the three main areas of growth following increased consumer cross-border habits also found some compelling behaviour.
Ecommerce
Visa Direct estimates about 589 million people made cross-border ecommerce transactions in the past year with 72% of these purchases being physical products on online retailers such as Amazon and eBay.
Interestingly there are considerable variations between countries with, for example, 94% of Mexican consumers making Ecommerce cross-border purchases compared to just 58% in Denmark. 80% of Australian consumers made a purchase which is just ahead of the French at 76% and Canadians and Americans at 75%. Just over half (51%) of consumers used a credit or debit card with digital payment services at 36%.
Financial institutions may be surprised to learn that only 51% of consumers will use their credit or debit card. There is still scope for other payment methods being used, including a significant 36% using digital payment services, followed by wire transfers and P2P services being often used as well.
Travel
The report found that two in three consumers surveyed have travelled overseas in the past year, with 62% saying they used a credit or debit card to book their trip, making it the most used payment method. Most respondents use the same method to pay for trip costs as they do for booking the trip. This is likely because cards are widely accepted and offer instant currency conversion and fraud protection.
The biggest travellers were those from Singapore (86%) and the UAE (84%). Australians were towards the lower end with 54% having travelled in the past year, just ahead of the US at 53%.
Remittance
Four in 10 of those surveyed have sent or received remittances in the past 12 months, with bank or wire transfers being the most common payment method. It’s not surprising that countries with a high migrant workforce such as the UAE and the Philippines rank the highest in sending or receiving remittances, at 87% and 74%, respectively. Australia was at 37% just behind the US at 44%. 14% are sending or receiving a remittance at least weekly.
The report said there was a huge opportunity for banks and fintechs in this space as consumers have no loyalty (66% were actively looking for a “to-to” provider) and 77% were using multiple providers to get what they needed.
“What consumers want is more choice, clearer information, and a solution they can trust to be secure and reliable. Whoever cracks this has the chance to attract and retain a significant share of customers’ cross-border payments,” the report said.
Choosing who to make a cross-border payment with can be overwhelming for consumers. So, when 71% say that they would like more guidance to better understand when and how to use different payment options, it’s a clear call for banks and fintechs to offer this: guidance from a trusted source is missing in the market.
Lastly, it is also worth noting that 66% said that when they find a payment option that works they will stick with it – and even more so in Australia with the figure at 77%.
This is where banks and fintechs can step up to be the provider of choice for secure cross-border transactions that consumers want. One that provides guidance, security, and a seamless, reliable service wherever they are paying to and from in the world.
Cross-border payments. Bank of England’ (2023, January 31) https://www.bankofengland.co.uk/payment-and-settlement/cross-border-payments