The long-lasting economic impact of the COVID-19 pandemic means that cross-border values will only exceed 2019 values by 2022; highlighting the effect that this major economic disruption will have on businesses around the world.
The insight is contained in a news study by Juniper Research.
As a result, we predict slow growth in B2B Cross-border Payments; reaching $35 trillion in 2022; representing a 30 per cent growth from a COVID-related low of $27 trillion in 2020.
During the post-pandemic recovery phase, businesses will be more cost-conscious; meaning that cross-border payments vendors must offer compelling cost propositions to companies, or they will fail to recover lost traffic. In this context, the digital disruption brought buy the B2B payments ecosystem is now more important than ever, in order to enable companies to work as efficiently as possible.
Given that the current method of processing invoices and payments is so manual, there is significant scope for the introduction of automation to reduce costs, increase speed and reduce errors. This automation can take several different forms and involve different levels of complexity; making it possible for businesses of every size to adopt a suitable form of automation.
Blockchain is also another interesting option. Blockchain payment networks comprise of a large ecosystem of partners that can facilitate payments. The current cross-border payments system is a similar network, but with much more complicated rules about who can pay how much to whom using what method.
Therefore, the introduction of a blockchain-based system could potentially reduce complexities in the cross-border area; increasing process standardisation, substantially reducing the risk of error (including double-spend) and the time taken for error checking. Blockchain networks will increasingly disrupt existing payment types in the cross-border market; driven by requirements for increased efficiency and transparency from traditional money transfer operators.
Another trend that should be taken into account is the dramatic increase in terms of payments speed, says Juniper. Instant payments, also known as real-time payments, are having a disruptive effect on the payments market, by injecting speed. However, the changeover to instant payments schemes is not happening in a universal way and is generating challenges of its own. This means that, despite accounting for 9.3 per cent of B2B transactions by volume in 2022 (up from 6 per cent in 2020), instant payments will only account for 6.3 per cent of B2B transactions by value in the same year.
Juniper suggests that operators will need to trial new systems and refresh their business models, or they will lose market share in a highly commoditised post-pandemic environment.