During the holidays, many people are sending money home from overseas — an often fraught experience. Here's how to make it more joyful

December 19, 2023 | By Sandeep Malhotra

This article was first published on Business Insider.

  • As demand for cross-border payments increases, it shouldn't be a headache to send money overseas, during the holidays, or at any time of the year.
  • Safe, simple cross-border payment systems make life easier — helping families to support each other across continents, and enabling SMEs to grow by opening a world of opportunities.
  • Mastercard believes a multilateral cross-border model that cuts across jurisdictions to allow payment providers to provide cross-border services is the best way forward.

The end of the year brings with it some unusual financial needs. Whether it's paying for presents under the tree or filling red envelopes, a night out with friends, or taking a trip back home to see loved ones, people around the world are thinking about home and how to make their money work for them. From a domestic worker in Singapore sending a paycheck back to her family in the Philippines, to an executive in Malaysia transferring tuition fees to their child's university in Australia, millions of people are united in their dependence on cross-border payments.

International money transfers between senders and recipients in different countries are growing exponentially. In 2022, global remittances rose to $767 billion, up from $540 billion in 2020, accounting for more than 15% of GDP in 25 low- and middle-income countries. They're projected to reach more than $810 billion in 2023.

Financial relationships stretch across the world

But the numbers only tell part of the story. Remittances are not just financial transactions; they are also a manifestation of the obligations people feel to each other across oceans. The boom in cross-border payments is in part due to the financial insecurity caused by global economic crises. 11,000 people in 15 countries were surveyed by Mastercard for its Borderless Payments Report 2023, which found that two in five respondents anticipate needing to send more money to struggling relatives overseas in the coming year than they did this year. In India, an astonishing 79% expected an increase.

More and more people are set to need these services. Half of the respondents said they are likely to consider working abroad in the next three years to secure a better economic future. Meanwhile, three in five of the small to medium enterprises surveyed (across 15 countries) are sourcing more international suppliers than they did a year ago. Fast, secure, and efficient cross-border payments are key to stimulating economic growth and protecting financial stability in an interconnected world.

Current offerings for cross-border payments are insufficient for users' needs

Once dominated by the big banks, today there are a number of digital-first companies offering cross-border payment services. Consumers know what they want: quick transfers, transparent costs, and easy use, ideally on an app. But too often, the current system of cross-border payments fails to deliver, beset with problems from hidden costs to failed payments. Respondents to the Mastercard survey said that cross-border transfers are slower and more difficult than domestic transfers. A third said that family back home had limited options to get their hands on the money, with a quarter saying that relatives had to travel a long distance to get it.

Even worse, a third have experienced late or failed payments — rising to half of all respondents in India. This has immediate ramifications: A failed transfer might mean missing a rent payment or being unable to buy food. Unsurprisingly, 50% of respondents suffered a negative effect on their mental well-being after late or failed payments. Consumers report that transfer fees are often unclear and expensive, and exchange rates unfavourable. This perception is backed up by the data. According to the World Bank, global remittance fees averaged 6.25% in the first quarter of 2023. Banks were the most expensive service providers, charging an average of 12.10%.

Working to fulfil a wishlist of needs

Good cross-border payment systems make life easier — helping families to support each other across continents, or allowing SMEs to grow by seeking better deals overseas — but too often, the opposite has been true. It's worth spending time identifying what tangible solutions could make cross-border payments better:

  • People need to know that the money they send is going to arrive, so payment providers must ensure that funds are delivered reliably.

  • Fees should not only be reasonable but be declared upfront so that consumers don't get nasty surprises.

  • Transparency will help counteract the misconception that fraud is more likely in cross-border payments.

  • 78% of consumers in the countries surveyed in the Borderless Payments Report rely on apps, so providers should invest in their digital offerings.

  • Providers should also identify and include underserved populations so that people all around the world can reliably access the money being sent to them.

Delivering on this list of requirements is not straightforward. Currently, cross-border payments work on an intricately interwoven web of agreements between banks, allowing them to act on each other's behalf in different geographies, and execute the services required to make payments. Mastercard believes the way forward is to move away from bilateral agreements between banks. A better solution is a multilateral, cross-border model that cuts across jurisdictions to allow payment providers to provide cross-border services. This involves embracing new technologies and forging partnerships between traditional financial institutions, fintechs, and established payment networks.

At the heart of cross-border transfers is trust and connection — between the banks and technology companies that collaborate to provide services, between the people sending money across the world, and between those people and the financial services they use. As this year ends and a new one dawns, we're looking forward to building and furthering those trusted connections, powered by industry partnerships so that safer, simpler, and more seamless cross-border payments become the norm for senders and recipients.

To learn more about Mastercard's cross-border services, click here.


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Sandeep Malhotra, Executive Vice President, Products & Innovation, Asia Pacific, Mastercard