The Traditional Cross-Border Payment Landscape is Changing
Traditional cross-border payment systems — largely facilitated by The Society for Worldwide Interbank Financial Telecommunications (SWIFT) and corresponding banking platforms — are notorious for inefficiencies.
The SWIFT system powers most international money and security transfers via a vast messaging network used by financial institutions (FIs) to quickly, accurately, and securely send and receive information, such as money transfer instructions.
Among the key challenges hampering SWIFT …
High Fees: Transaction fees can range up to 5 percent for cross-border transfers, a significant cost burden for SMEs and individuals sending remittances.
Slow Settlements: Traditional cross-border payments can take 3-5 days to settle due to the involvement of multiple intermediaries.
Limited Transparency: With many payment systems lacking real-time tracking, businesses and individuals face uncertainty over the status of transactions.
Despite these inefficiencies, small and medium-sized enterprises (SMEs), which account for 90% of the world’s businesses, are particularly affected by these issues, because they rely on it to facilitate global trade and B2B transactions.
The Future of Global Payments & Cross-Border Transactions
Inefficiencies, in part, have put pressure on the global payments ecosystem to evolve to include the integration of blockchain technology and fintech innovation. Traditional cross-border payment systems, once dominated by legacy systems such as SWIFT, are now being disrupted by blockchain platforms such as Ripple (XRP), XDC Network, and Stellar, as well as fintech companies like Block (owner of Square) and Hedera Hashgraph.
This shift is driven by the need for faster, cheaper, and more transparent cross-border transactions, especially for SMEs, as well as underbanked populations and FIs operating beyond U.S. borders.
Market Size, Regional Trends & Growth Metrics
B2B Cross-Border Payments
The global B2B payments market is expected to grow, with small businesses driving much of the growth. SMEs are increasingly adopting blockchain solutions including Ripple and Stellar to overcome the barriers of high costs and long settlement times that plague legacy banking systems. As more businesses and consumers demand real-time payments, blockchain solutions are poised to capture a growing share of this market.
SME Adoption & Impact
SMEs support 90 percent of the world’s businesses, and their demand for improved cross-border payments is helping to drive the adoption of a more efficient blockchain-based payment network. Reports indicate that 63 percent of SMEs have already turned to fintech and blockchain providers for alternative payments and banking services. This shift has been particularly notable in Asia-Pacific and Latin America, where regulatory frameworks are becoming more favorable to digital assets.
Projected Growth of Payment Innovations
According to McKinsey & Company, the cross-border payments market is expected to grow at a Compound Annual Growth Rate (CAGR) of up to 7 percent through 2025, with blockchain solutions playing a major role in reducing transaction fees and improving speed.
The adoption of stablecoins and Central Bank Digital Currencies (CBDCs) is also projected to increase, with platforms such as Stellar and Ripple integrating stablecoins to improve liquidity and settlement times further.
Regional Adoption, Impact of Digital Payments
Asia-Pacific:
Asia-Pacific is at the forefront of digital payment innovation, with governments pushing for cashless societies and blockchain-driven solutions. In countries such as India, the Unified Payments Interface (UPI) processed more than 10 billion transactions in a single month, reflecting the region's enthusiasm for digital wallets and QR code-based payment systems. Similarly, Japan's Cashless Vision aims to increase digital payments to 40 percent by 2027.
Africa:
Africa is leading the world in mobile money adoption, with nearly 70 percent of the global mobile money transactions happening in the region. Mobile-first payment solutions like M-Pesa and Zeepay dominate markets such as Kenya and Nigeria, where traditional banking infrastructure is weak. Remittances via blockchain are growing as well, with crypto payments offering an affordable alternative for cross-border money transfers, bypassing the high fees of traditional banks.
Latin America:
Latin America has embraced crypto as a hedge against inflation and unstable local currencies. Countries such as Brazil and Argentina are seeing rapid adoption of stablecoins for everyday transactions, with projections showing that cashless transactions will grow by over 50 percent by 2025. Brazil’s instant payments system, PIX, is also a major driver of digital payment growth, handling over 40 percent of retail transactions in the country
Europe:
In Europe, instant payments are also becoming increasingly popular. Initiatives like SEPA Instant and the UK’s Faster Payments Service have enabled real-time transactions across the continent. Adoption is expected to double by 2027, driven by regulatory support and demand from consumers for faster, more transparent cross-border payments.
Next Steps
As this overview makes clear, the payment landscape — once dominated by legacy banking platforms such as SWIFT — is rapidly evolving. Be sure to read my follow-up article next week, which provides a deep dive into decentralized, blockchain-based payment systems such as Ripple’s On-Demand Liquidity Platform as well as the growing demand for stablecoins, which are increasingly serving as a bridge between recognized fiat currencies and cryptocurrencies.
In the meantime, be sure to read my look at how cryptocurrencies and blockchain technologies are transforming commerce.
About the Author
Ash Aly is the Chief Technical Officer for Avestix Group. His background includes extensive experience as a quantum data scientist, applied machine-learning practitioner, fintech innovator, technologist, and exponential entrepreneur. He earned his degree at the University of Ottawa.
