The services of tech companies and payment providers have often gone hand in hand, but never has that been more apparent, or more vital than during the pandemic.
With the onset of Covid-19, people and companies adapted in ways they’d never needed to before. As entire industries were scaled back or shut down, many entrepreneurs and digital innovators found new demand from consumers and businesses outside their normal markets – often based all over the world.
While the pandemic has been tough for many it has undeniably prompted a change in how people and businesses operate, both now and in a post-pandemic future. This shift has made the global economy more important and relevant than ever to businesses both small and large, and businesses have told us they intend to keep doing more international business in the future, reaping the benefits they’ve discovered during this period. In fact, our Borderless Payments Report found 68% of micro, small and medium-sized enterprises plan to do more international business in the next 12 months and 65% plan to source more international suppliers as a way to spread risk.
The role of digital and tech platforms
None of this would have been possible if it weren’t for the digital platforms that are now creating international opportunities for so many. These companies have ultimately helped to make the world a smaller, more connected place.
Selling goods and services internationally isn’t a new concept in tech. Many like Amazon and eBay have been selling goods globally for years, and service providers like Airbnb and Fiverr have a huge international user base. But even these tech giants have come to realise the acute importance of international workers and suppliers in a post-Covid world – particularly with workers based in multiple countries and this trend likely to continue in the long term. In addition, we’ve seen more digital businesses expanding, moving into new markets, partnering with other companies and taking on more employees in order to keep up with demand.
So as more and more of us are purchasing goods, selling services and paying partners or employees on a global scale, the need for fast, straightforward, and reliable cross-border payments has never been greater.
The barriers to cross-border payments
However, for many this part of the process remains frustratingly difficult, with cross-border payments mired in unnecessary complexity, uncertainty and an overall lack of transparency.
For example, as part of research for Mastercard’s Borderless Payments Report earlier this year, we spoke to business owners around the world who told us just how tough things can get. One spoke of how they often had to wait weeks or months for payments to be processed, and another said they routinely have their payments to regular business partners denied, all while being told by their bank there was nothing the bank could do to avoid this. Some workers told us that high, unpredictable exchange rates were an issue they regularly faced with 56% of people surveyed saying that poor exchange rates prevent them from making more cross-border payments.
When businesses are bringing on new customers, expanding into new markets, and forging new partnerships, setbacks when making and receiving payments can often feel like stumbling at the final hurdle.
The need to send high volume, low value international payments to global partners, providers and employees on a regular basis is critical for many digital businesses. But traditional cross-border payment methods, such as wire transfers, are often slow, unreliable and can have unpredictable delivery times. On top of that, these transfers often incur fluctuating fees which are not always clear at the start of the process. People expect the same convenience, transparency and choice from international payments as they do from domestic ones.
When this doesn’t happen it’s not just inconvenient. It can jeopardize the ability of businesses to grow and expand, putting off consumers, suppliers and workers, and potentially pushing them into the arms of competitors.
We know from our research that freelancers and gig workers now expect immediate payment for the work they do, and nearly three-quarters of those we asked said they would leave a marketplace because of late payments. On the flip-side, 85% said they would be keen to take on additional work if they got paid faster.
So, if digital businesses could guarantee better, faster and more reliable payments – with greater choice about how payments can be made and received — it stands to reason that they would be a preferable partner for many workers and potential business partners.
The need to break down barriers to international business and trade has never been more clear, and there is a real opportunity for digital and tech companies to work with payment providers to tackle these issues.
By making sure they can process payments in a wide variety of markets quickly and with ease, they are not only giving themselves a competitive advantage, but also playing a key role in supporting businesses and wider economies as they recover from the impact of the pandemic.
Reducing complexity, cost and risk
With Mastercard’s Cross-Border Services we want to partner with companies and be part of the solution. Making sure that cross-border payments are as simple, transparent and reliable as possible is a big part of turning this into a reality.
For those looking to expand their business globally, our payment services now reach over 100 markets across the world, covering more than 90% of the world’s population. We can now process payouts for 90% of the world’s bank accounts and over quarter of a million cash payout locations. On top of this, we also allow mobile wallet payouts in select markets and are working on growing this further.
One thing we know from the businesses we’ve spoken to is that security is paramount, with many telling us they worry about fraud when conducting international transactions. We need to tackle this, but it shouldn’t come at the expense of simplicity and choice. This is something we’ve worked hard on at Mastercard, making sure we comply with the most robust anti-money laundering rules and have in place the highest-grade security systems. At the same time, our payment services are able to integrate with a variety of systems, including APIs, web or batch uploads, ensuring flexibility and choice for digital partners.
This means our services are not only secure and robust but also cost effective. Our in-house treasury helps reduce operational costs and liquidity burdens for our customers and our network is purpose-built to deliver cost-efficiencies for high volume, low value transfers – unlike many other networks.
As well as simplicity, businesses want to send and receive payments as quickly as possible. We’ve all become used to seeing domestic transactions processed in real time, and it stands to reason that many now expect the same speed for international payments too.
This is something we’ve prioritised at Mastercard, and our Cross-Border Services now deliver funds in real time to bank accounts in over 50 markets, as well as mobile wallets and cash payouts. While we’re committed to growing this further, our direct integration with local payout partners in numerous countries means we can deliver international payments quickly and seamlessly – something global tech giants with their multi-national business and international employees and suppliers desperately need.
Technology knows no borders – neither should payments
Digital innovators have been instrumental in helping many to weather the storm of the last few years. They’ve enabled businesses to move into new markets, source new suppliers and forge new partnerships, and help workers find new employment in these difficult times.
As we move into a post-pandemic era it is essential that digital platforms and payment providers work together to break down the cross-border barriers and issues many businesses still experience. And in the process, these innovators will give themselves an even greater competitive edge, offering better speed, transparency, predictability and certainty to their partners, suppliers and employees around the world.