The world of international payments is changing rapidly. In recent years, however, there has been a dramatic increase in the ways that money can be transferred between countries, with new technologies and alternative payment methods making it easier and faster than ever before.
Some of the most significant trends going into 2023 are the rise of digital currencies, the growth of mobile payments, the rise of alternative payment methods and the increasing use of foreign exchange (FX) platforms.
These four key trends are going to keep shaping the landscape of international FX transfers in 2023 and beyond.
1. The rise of digital currencies
One of the most significant changes in the payments industry in recent years has been the rise of digital currencies. Bitcoin, the first and most well-known cryptocurrency, was launched in 2009. Since then, hundreds of other digital currencies have been created. The most known ones besides Bitcoin are Ethereum and Litecoin.
At first glance, digital currencies seem to offer a number of advantages over traditional fiat currencies: they are borderless, globally accessible, and work 24/7. Since no central authority is issuing digital currencies, money transfers in Bitcoin and other cryptocurrencies can not be stopped or reversed.
However, as the use of digital currencies has increased over the past years, the risks of these innovations have become more visible, especially in a business context. It includes:
- Digital Currencies are not backed by a physical commodity or by a government. This increases price volatility and uncertainty.
- Digital Currencies are subject to fraud, theft, and money laundering. Due to the uncontrolled nature of digital currencies, they are subject to crime, scams, and illegal activities.
- The public and businesses do not understand Digital Currencies well: very few businesses outside the cryptocurrency scene accept digital currencies. The public has become wary of them because of increased fraud and scams.
Most reputable businesses who value fast international payments thus prefer dealing in government-backed currencies through new efficient FinTech platforms.
One relatively new digital currency is stablecoins. Stablecoins are pegged to a government-backed currency, such as the US dollar. In this way, they combine the efficiencies of blockchain technology with the security of government-backed money.
However, transfers in stablecoins are still subject to the risks of fraud, money laundering and the irreversibility of payments as they typically run on a decentralised blockchain network. This is why businesses outside the cryptocurrency space have yet to start using them in any meaningful way.
2. The growth of mobile payments
Another trend reshaping the payments landscape is the growth of mobile payments. Mobile payments are payments made using a mobile device, such as a smartphone or a tablet.
There are several reasons for the growth of mobile payments. First, the number of people accessing mobile phones is increasing rapidly. Second, mobile payments are convenient. They allow people to make payments anywhere, anytime. And third, mobile payments are becoming more secure.
The top mobile payment platforms are Apple Pay, Google Pay, Samsung Pay, Wechat, and PayPal. These platforms allow users to pay for goods and services using mobile devices. Apple Pay and Google Pay are the most popular platforms in the United States and Europe, while Samsung Pay and Wechat are more prevalent in Asia. PayPal is a popular platform worldwide.
3. The rise of alternative payment methods
In addition to digital currencies and mobile payments, the rise of alternative payment methods has also accelerated.
Alternative payment rails are payment methods that are alternatives to traditional bank transfers and credit cards. Alternative payment rails include e-wallets, peer-to-peer (P2P) payments, and prepaid cards.
E-wallets are digital wallets that allow a person to store, send, and receive money. P2P payment platforms allow businesses to send and receive money without going through a bank. And prepaid cards can be used like debit cards, but you fund them in advance.
Yet, these alternative payment methods only make up a small share of the global currency transfer market, albeit their growth, especially in P2P payments, has sped up.
4. The increasing use of foreign exchange (FX) platforms
Another trend impacting international payments is the increasing use of foreign exchange or FX platforms.
FX platforms allow you to buy and sell foreign currencies online. There are a number of reasons for the growth of FX platforms for businesses which include:
- Increased transparency – FX platforms provide real-time market information and prices, allowing business owners to make informed decisions.
- Improved execution – FX platforms offer a variety of order types and execution options, allowing businesses to execute their trades quickly and efficiently.
- Lower costs – FX platforms typically have lower costs than traditional brokerage firms, making them more affordable for businesses.
- Greater flexibility – FX platforms offer a variety of tools and features, giving users the ability to customise their money transfer experience.
- Increased security – FX platforms use state-of-the-art security features to protect peoples’ information and funds.
- Improved customer service – FX platforms typically offer live customer support, allowing clients to get help when needed.
- Global access – FX platforms offer companies the ability to trade in global markets, providing them with the opportunity to profit from a variety of market conditions.
The payments landscape is changing rapidly. We’re seeing the rise of digital currencies, the growth of mobile payments, the rise of alternative payment methods, and the increasing use of foreign exchange or FX platforms. These trends are reshaping the way the world sends and receives money.
While digital currencies and the blockchain have been hot topics on the FinTech scene, their adoption has yet to keep up with expectations. The main reasons for this are problems in compliance, money laundering and the irreversibility of payments.
On the other hand, FX platforms and mobile payments have continuously expanded their reach because of their ease of use, regulatory umbrella and ability to rapidly transact in many countries around the globe.
Are you a business in need of a reliable international currency transfer solution? Sign up with CurrencyTransfer today to learn how to effectively manage available funds and use a secure global FX platform to manage currency flows for your business.
Gustav Christopher is a writer specialising in finance, tech, and sustainability. Over 15 years, he worked in banking, trading and as a FinTech entrepreneur. In addition, he enjoys playing chess, running, and tennis.