Credit and finance for MSMEs: Global spend on business-to-business (B2B) cross-border payments will exceed $40 trillion by the end of 2024; increasing from $37 trillion in 2022, said a new whitepaper by digital technology market research firm Juniper Research. 9 per cent ($3 trillion) of this growth will be driven by the rising popularity of e-commerce marketplaces, where e-commerce merchants are based in international locations selling goods internationally via local e-commerce platforms, the paper noted. A cross-border B2B payment is any payment between businesses for goods or services made internationally irrespective of the different payment methods involved.
The problem of cross-border transactions typically being slow, expensive and difficult to track has been exacerbated by the complex accounts payable processes common with larger enterprises. However, the rise of cross-border instant payments, where payments are transacted in 10 seconds or under, is significantly improving this difficult situation even as instant payments currently are restricted to certain cross-border destinations, the research whitepaper How Automation Is Unlocking the B2B Payments Market said.
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Research’s co-author Nick Maynard said that while cross-border instant payments are not yet widespread, only accounting for 8 per cent of cross-border transactions by value globally in 2024, significant progress is being made in linking up national instant payment schemes.
“This can unlock substantial improvements for B2B transactions. B2B payment vendors must be driving further integration of the instant payment rails they support on a national level to solve the difficult challenges with legacy payment channels,” said Maynard.
Also read: MSMEs’ business spends market is pegged at around $1 – $1.5 trillion: Report
The concept of instant payments is akin to India’s highly successful Unified Payment Interface (UPI) system for making quick payments. The system developed by the National Payments Corporation of India (NPCI) enables various bank accounts into a single mobile app of any bank, merging different banking features, and providing seamless fund routing and merchant payments. UPI went global with Nepal becoming the first country to adopt it followed by other countries including Bhutan, Malaysia, UAE, and the UK to enable cross-border transactions.