Making Money Move: Why Cross-Border Payments Matter

While people have migrated to new countries in pursuit of brighter futures throughout history, ubiquitous digitization has opened new pathways for economic growth and opportunity around the globe. Digital nomads – professionals who travel while working remotely – have emerged in recent years alongside technological advances and the post-pandemic era of flexible work. In fact, approximately 24 million Americans intend to become digital nomads in the next three years and another 41 million are considering the lifestyle. That’s just over 12% of the U.S. population, according to Mastercard’s 2023 Travel, reimagined report. 

This lifestyle drives a new set of needs for making and receiving payments, as well as managing money across borders. Insights from Mastercard’s Borderless Payments Report reveal that  consumers are increasingly favoring digital versus in-person cross-border payments, motivated by a desire for quick and secure capabilities to send money along with built-in confirmation that funds were received. 

Despite critical relevance, the options for the way people pay and get paid across borders has, for many, failed to keep pace with modern life. But paired with rising consumer expectations, consumers surveyed expressed the growing demand for more practical, lower-cost, digital cross-border payment solutions that are not only instantaneous, but also provide a safe and seamless experience.

According to the Mastercard data, consumers are focused on finding a cross-border payments provider that prioritizes low fees, speed of delivery, and ease of use. Demonstrating the need for budgetary control, more than three-quarters (79%) of respondent consumers say having an up-to-date view of their financial position in real-time would be helpful amid the current economic volatility. 

“People want to know their provider isn’t a cold, clinical platform, but a company that can provide additional services and useful touches, such as automated insights into their financial health,” said award-winning futurist Shivvy Jervis. 

These needs are especially present in Eastern Europe, the Middle East, and Africa. In fact, migrants account for an average of 70% of the employed population in Gulf Cooperation Council (GCC) countries, according to the Wilson Center. On the receiving side, inbound flows accounted for more than 15% of the GDP in 25 low-and middle-income countries (LMICs) in 2022, and in 2023 was estimated to reach $669 billion.

“Fifteen years ago, you didn’t, for example, have people in Ukraine developing code for companies in Saudi Arabia, so there wasn’t a strong need for cross-border payments to individuals and therefore the payment process wasn’t smooth at all,” explained Onur Kursun, executive vice president, Transfer Solutions, Asia Pacific, Eastern Europe, Middle East, and Africa at Mastercard. “With the rise of e-commerce and the gig economy, new payment flows have emerged that have raised people’s need for and expectations of cross-border payments generally.”

Despite improvements to money movement, challenges remain. The World Bank’s Remittances Prices Worldwide Database highlighted that fees remain persistently high, costing 6.2% on average to send $200 as of the second quarter of 2023. 

People are demanding greater transparency when it comes to pricing, citing hidden fees as an impediment to transacting more frequently. “This is important,” said Kursun. “If you rely on a remittance to pay your rent, even a $10 cut means it doesn’t do the job.” 

Importantly, remittances should be accessible and provide choice in how users transfer and receive funds. More than a third of people surveyed in the Mastercard study said their families back home are restricted by limited accessibility to money that is sent to them, with many having to travel long distances to receive it. This makes it critical for any modern money transfer solution to address this gap with a variety of payout options and channels that make it easy for people to access their funds, no matter the situation.

“In the past, consumers were reliant on physical signs – for example a sign advertising cross-border payments, where they could pick up their money,” added Kursun. “But now, we deliver money directly to bank accounts, to cards, and digital wallets – as well as to thousands of cash payout options worldwide. But as people increasingly turn to digital methods, it’s important that we don't lose sight of the importance of maintaining access to cash. This is essential for financial inclusion because not everybody has bank accounts and not everyone has cards – it’s about providing choice and driving inclusion.”

To ensure more people can access quick, reliable payments how and when they choose, Mastercard Move – Mastercard’s full portfolio of money transfer capabilities, which includes its Mastercard Cross-Border Services and Mastercard Send solutions – enables people and organizations to send and receive funds safely and securely, both domestically and internationally. 

Mastercard Move provides bank, fintech and corporate customers with access to nearly 10 billion endpoints around the world, including access to 95% of the world’s banked population across more than 180 countries and 150 currencies. It helps address the challenges faced by individuals and businesses as they seek to move money more efficiently in an increasingly borderless world.

“Cost, transparency, and choice of endpoints are the main challenges people tell us they are facing,” added Kursun. “And I believe that at Mastercard we’re effectively addressing them all.”

For further insights, visit Mastercard’s website.