How technology is challenging traditional cross-border payments

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How technology is challenging traditional cross-border payments

It’s no secret that one of the biggest pain points of traditional cross-border payments is how long it takes for funds to arrive at the destination account. On average, cross-border payment takes 3-5 days, with a 5% error rate using SWIFT. Not to mention the average cost for bank transfer at 11.8%. This costs too much in terms of number and efficiency. 

In this respect, blockchain has risen as a disruptive technology that presents an infrastructural solution. With blockchain, real-time communication about certain payment information can happen, eliminating failures and completing the transaction instantly at much lower fees. Blockchain technology can open up access to payments for those who are otherwise underbanked, challenging the dominance of traditional cross-border payments.  

But distrust of new technology is commonplace. Besides urging interested parties to develop a digital mindset, fintechs can and must build trust by bridging the gap between digital and traditional players. But first, let’s explore the challenges of technology. 

The technological challenges to traditional cross-border payments

Financial literacy. Let’s take blockchain as an example. Currently, only 0.71% of the world’s population use blockchain technology. That’s 65 million people. Remember the smartphone and subsequent e-wallet boom? Mass adoption is crucial to the success of any technology, and a lack of awareness and institutional support have led many to the end of the road. 

Gap in data availability on how existing IT infrastructure can be integrated with legacy data and how the resulting system will perform hinders the proliferation of a technology. It can be hard to determine if something can work well with systems that are already in use. While a new technology can ease operational processes and even lower costs eventually, it doesn’t change the fact that in the short-term, it will run operational budgets higher and even restrict growth. Therefore, the costs and risks involved in adopting a certain technology must be studied extensively, and there are many cases where projects have simply been abandoned.

Gimmicky technologies that address perceived needs and not actual needs of their target audience. An example of this is gesture control on smartphones. The ability to use hand motions to input certain commands seems good on paper, but the reality is that most people would find it easier to use actual screen inputs. The same is true for payments: while certain features make sense to the tech savvy, most customers of a local remittance company may not need it due to their way of life or infrastructure restrictions.     

2 ways fintechs can build trust in new technology

Proof-testing technology and becoming an advocate for a solution. After all, people trust things that work. In 2021, the fintech industry reportedly saw a 15% increase in the rate of identity fraud. Not only that, a study by Vesta pointed out that in Southeast Asia, the rate of attempted fraud is up to 12 times greater than the global average, and online merchants lose an average 1.6% of revenue to direct fraud each year. Suddenly, using blockchain, a digital ledger that is immutable and transparent, emerges as a key solution to minimise fraud with each recorded transaction. Having use cases that highlight the advantages of blockchain in combating fraud means fintechs can sell the solution to the problem, and not merely a product.

Working together with governments, regulators and localised partners to align missions. The goal here is to have involved countries under common/shared philosophies and designs so developments can roll out seamlessly. The CBDCs are a good example. While CBDCs are driven by governments, private companies, like Ripple, have successes developing digital currencies. Their experience can improve existing architecture without rebuilding it from the ground up. This ensures interoperability and helps payment systems with transition strategies. Simply put, people will trust a new technology more when they see the support of official institutions alongside private firms. 


The world saw US$37.15 trillion in cross-border payments in 20201​. This figure is expected to grow to US$39.9 trillion by 2026. International payments and transfers must now be quick, accurate and convenient.

New technologies like blockchain will one day be mainstream, but this does not spell death for traditional cross-border payments​. They might still be the most suitable choice for many. To remain competitive, these businesses are lowering their fees and/or tweaking their exchange rates. They would certainly not have the appetite nor budget to integrate new payment technologies.

This is where fintechs come in. By testing out new technologies, adopting and integrating them into payment systems of these traditional players, they can be at the forefront of positive changes: building trust in new technology.

1 2021 Global Cross-Border Payments and Remittance Services Growth Opportunities Report, Frost & Sullivan.

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