Cross-border payment flows are projected to increase by 53% between 2023 and 2030, rising from US$190 trillion to US$290 trillion. This growth will be driven by the rise of innovative payment technologies and trends including real-time payment (RTP), blockchain, and embedded finance, which are poised to make transactions faster, easier and more transparent, a new report by Convera, an American business-to-business (B2B) cross-border payments company, says.

The report, titled “Fintech 2025+: Trends, technology, and transformation in global commerce”, provides an overview of the cross-border payments landscape, shares industry projections and explores emerging trends.

According to the report, cross-border payments are expected to experience strong growth over the next seven years, fueled by digitalization efforts by industry stakeholders and technological advancements.

RTP systems are highlighted as a key growth driver, praised for their ability to enhance liquidity and financial stability by unlocking working capital and reducing transaction times. Around the world, RTPs have proliferated over the past years, propelled by government support.

These have contributed to their growth by establishing and enforcing regulatory frameworks that create a standardized and secure environment for RTP systems. These regulations address data privacy, fraud prevention, and consumer protection, ensuring that the RTP ecosystem is safe and reliable.

In addition to regulatory support, governments have also invested in and supported the development of national RTP infrastructures. Examples include India’s Unified Payments Interface (UPI), and Brazil’s PIX, both of which are direct results of governmental initiatives aimed at modernizing payment systems.

Governments are now working on integrating RTPs with cross-border payments. In Europe, Sweden joined the Eurosystem TARGET Instant Payment Settlement (TIPS) in February 2024, becoming the first non-euro area country to join the instant cross-border payment scheme with its national currency, the Swedish krona. Meanwhile, the European Payment Council’s One-Leg Out Instant Credit Transfer scheme, which went live last year, aims to streamline international transactions within and beyond Europe.

In Southeast Asia, Vietnam, Indonesia, Malaysia, Thailand, the Philippines and Singapore have joined hands to connect their RTP systems, emphasizing QR code usage for retail. This collaboration aims to bolster trade and resilience across the region.

In 2023, RTPs continued to climb to new record highs, totaling 266.2 billion transactions and recording a year-over-year (YoY) growth of 42.2%, an industry report by ACI Worldwide and GlobalData show. The figure gives RTPs a share of 19.1% among all electronic transactions globally. By 2028, that proportion is expected to rise to 27.1%, and reach a total of 575.1 billion transactions, representing an annual growth rate of 16%.

Another growth driver highlighted in the report is the integration of blockchain technology. Fintech companies are increasingly using distributed ledger technology (DLT) to address the challenges associated with cross-border payments by enhancing transparency and traceability, reducing fraud risk and improving security.

A survey conducted in 2022 by PYMNTS.com found that 37% of businesses were already using blockchain for cross-border payments, with an additional 13% expressing a desire to adopt this technology in the future.

The use of blockchain for cross-border transactions is expected to grow rapidly, with projections by Statista indicating a significant increase in B2B transactions on blockchain by 2025, led primarily by the Asian market.

On a global scale, the Bank for International Settlements (BIS) is collaborating with central banks on several DLT projects aimed at enhancing cross-border payment speed, transparency, and interoperability.

Project Agora, for example, seeks to integrate tokenized commercial bank deposits with tokenized wholesale central bank money using smart contracts for instantaneous settlement. Project mBridge aims to create a unified platform for issuing and exchanging wholesale central bank digital currencies (CBDCs) from multiple central banks, reducing cross-border transfer times from days to seconds. Finally, Project Dunbar focuses on developing a common platform for CBDC issuance and exchange to address interoperability challenges.

Embedded finance is another driver of cross-border payments outlined in the report. Embedded finance, which refers to the integration of financial services or tools into non-financial platforms, apps or ecosystems, represents a significant evolution in the financial services landscape, building upon concepts like open banking, open finance, modular banking and banking-as-a-platform (BaaS).

The approach is now utilized across various sectors to enhance shopping experiences and mobile services. It’s also used in supply chain operations to streamline processes and facilitate trade finance. For businesses with international operations, embedded finance simplifies currency exchange in cross-border transactions.

Estimates suggest that the global opportunity for embedded finance will reach US$7.2 trillion in the next decade, twice the combined value of the world’s top 30 banks today.

Cross-border payment revenues are expected to reach US$260 billion by 2030, driven by the B2B segment (US$220.5 billion). Consumer-to-business cross-border transactions are set to generate US$34 billion in revenues, followed by business-to-consumer (US$13.4 billion), and consumer-to-consumer (US$12.3 billion).

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