Making cross-border payments more transparent

Borderless Payments – breaking down payment barriers

Transparency is at the heart of Mastercard’s solutions

The world is becoming a smaller place. Modern technology has allowed us to communicate and share information with each other instantly and across any distance like never before.

Nowhere is this clearer than in the world of business. Previously conducting commerce across borders was the preserve of big international companies. But with the advent of new digital platforms, this is now a possibility for almost any worker or small business. Indeed, more than a third of the thousands of workers and businesses we’ve spoken to have told us they were making more cross-border payments than they were 12 months ago.

Finding consumers for your goods or employers to work for around the globe has now become the norm for many, with clearer and more transparent processes for achieving this. And yet despite these innovations, there is still one area where transparency is sorely lacking – cross-border payments.

A lack of transparency in cross-border payments

Those who send and receive funds across borders are often subjected to hugely uncertain and opaque processes, in stark contrast to the speed, reliability and transparency of making domestic payments.

To better understand this, Mastercard spoke to and surveyed thousands of consumers and businesses from countries all around the globe. We found that many have little choice over how they conduct their transactions, experiencing unpredictable speeds, high costs and little clarity around status.

One worker told us that when he sends money home to family in his home country he often has to wait days to find out if it’s arrived safely, with no way of getting updates during the process. Another who uses a money exchange house told us how they regularly get hit with high and unpredictable fees and rates. One supplier said that they routinely wait weeks or months to get paid, having to constantly chase for updates.

This lack of transparency causes unnecessary admin and worry for both people and business owners. Rather than focusing on growing their business and doing their job, too many entrepreneurs are spending valuable time trying to stay on top of disparate and vague payment processes, forever attempting to align funds sent or received with goods or services provided.

Those we spoke to about this want to see change, but are realistic about what can be achieved. While cross-border payments are becoming faster and faster, this isn’t the main priority for them. Their desire is to see an end to the high, unpredictable fees and get better real-time confirmation of payments.

The challenges of giving greater transparency

This all sounds reasonable, so why isn’t it a reality? One reason is because of the disconnect between the various different systems we use to make financial transactions across borders. It’s not that banks and other providers don’t want to offer a good service to their customers, it’s that sharing the relevant information needed to make simple cross-border payments is cumbersome, leading to delays, uncertainty and a lack of transparency.

Greater transparency gives people confidence when using payment services. They feel reassured when they can check on the status of their transaction whenever they want, see upfront any fees they will pay and know when it has arrived safely. It stands to reason that in a competitive market people and businesses will choose providers which can give them this level of service, choice and control.

Of the businesses we surveyed, 81% said using online cross-border payments, including wire or bank transfers, had helped their business to grow. And over two thirds of the small and medium sized businesses we sampled said they hope to do more international business than they did during the pandemic.

How do we solve these issues?

With this expected increase in cross-border payment transactions, there is an opportunity for banks, non-banking financial institutions and digital platforms to come together with payment providers to tackle these challenges, give people better choices, and in the process kickstart the global economy as we recover from the pandemic.

Transparency is at the heart of Mastercard’s solutions, and nowhere is this more evident than in the cross-border payment services we’ve built.

We’ve made sure that our services give consumers any costs, rates or fees upfront, so they’re never caught off-guard by what they’ll pay. As well as this, we give people full visibility of their funds throughout the transaction process. So, whether they are receiving money from loved ones or paying suppliers for goods, they can rest assured knowing where their funds are, its value, and when it will be received.

All of this goes hand in hand with our dedication to speed and choice. Our network covers over 100 markets and 90% of the world’s population. And we deliver funds in real-time to bank accounts in more than 50 markets, which we’re constantly growing, in addition to real-time delivery of payments to mobile wallets and cash payouts.

Everyone deserves transparency when managing their money, and the confidence, control and security this brings. Together with banks, digital platforms and other institutions, we want to give people a better service, and in the process ensure we all play a role in boosting business and growing economies around the world. Given the events of the past two years, never before has this been more important.

By Rasika Raina, senior vice president, strategy and transformation, Mastercard Cross-Border Services