The current international payments market is hugely fragmented, with multiple networks and mechanisms operating independently of each other and it is clear that new market entrants have the opportunity to shape and define the future of this industry, writes John Sharman
At present, the £316 billion cross border payments market is dominated by large banking groups, which typically make international payments slow, inefficient and costly for businesses. However, Banks are increasingly losing market share to specialist and disruptive providers, which are moving in to take advantage of the global migration from cash to electronic payments. The advent of new electronic payment technologies and providers suggests that the market is poised for a dramatic overhaul.
The global migration from cash to e-payments creates opportunities for payment providers. By 2022, it is anticipated that the value of non-cash transactions will reach $712 trillion from today’s value of $377 trillion. When this figure is compared with revenue estimates from the traditional payments and transaction-banking revenues ($1.1 trillion), it is clear where the attraction lies.
Currently, transferring money overseas through the traditional legacy institutions is expensive; banks can charge $25 or more to send money over a border and charge fees of between 2-3% when changing currencies. This creates an unnecessary financial burden for corporations making these transactions. Indeed, volumes of cross border payments are being driven upwards by corporations paying overseas suppliers, employees and overseas customers. Although the industry is on the brink of dramatic change, it is likely that this change will materialise in varying ways across continents.
Read the full article here at Bankingtech.com