This article is part of:Centre for Regions, Trade and Geopolitics

• MSMEs are especially vulnerable to current rising threats to payment system interoperability.
• Cutting-edge technology provides solutions to the cross-border payments that are crucial for economic growth and equitable global trade.
• Sustained public-private collaboration is needed to remove further obstacles, such as regulatory confusion and market disparities, to cross-border trade.

The cross-border payments landscape is transforming rapidly, occurring alongside increasing economic uncertainty and market volatility. As global trade dynamics shift and economic conditions become more unpredictable, financial markets grow increasingly volatile, potentially raising the risk of fragmentation in the financial system. This could further complicate the interoperability and efficiency of international transactions.

Micro, small and medium-sized enterprises (MSMEs) are especially vulnerable, facing higher transaction costs and longer settlement times than large corporations; this locks up liquidity and hampers growth. Their inclusion in cross-border payments is crucial for economic growth, innovation and a more equitable global trade landscape. The G20’s roadmap for enhancing cross-border payments targets lower costs, and improved speed, access and transparency by 2027. Achieving these goals requires robust public-private collaboration to align payment innovations with regulatory frameworks, especially as the global economy fragments.

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Numerous solutions are being developed by both public and private sectors. Real-time payment systems, AI-driven compliance tools, and central bank digital currency (CBDC) bridges are streamlining processes, reducing fraud and tax evasion, and enabling faster, more secure settlements.

The Repository of Innovative Cross-Border Payment Solutions for MSMEs, launched by the World Economic Forum and IDB Lab under the PAGA Initiative, showcases these advancements in line with G20 objectives. Here is how cutting-edge cross-border payment solutions are positively impacting MSMEs:

1. Complex tech-driven solutions, simple user experiences

Innovators are making financial supply chains frictionless and agile by leveraging blockchain and distributed ledger technologies (DLT). Tokenized cash and smart contracts automate transactions based on predefined conditions, ensuring security, transparency and efficiency.

For instance, Citi Token Services uses tokenized internal liquidity transfers on the blockchain for instant, 24/7 money movement between accounts, optimizing liquidity and reducing manual processes. Félix, enabled by Circle, leverages USDC, a regulated digital currency whose value is pegged to the US dollar, to reduce the cost of transferring funds and decrease remittance fees for consumers. Decaf uses stablecoins to provide a safeguard against inflation, enabling rural MSMEs to participate in global markets.

Despite their technical complexity, these solutions prioritize a simple user experience. Technology is used to facilitate the experience without users needing to interact with the complex backend. Tpaga created a WhatsApp bot to enable MSMEs to send and receive cross-border payments using their smartphones, supporting adoption even among those with limited digital literacy.

Other solutions integrate various payment options, currencies and processes into a single window, helping MSMEs grow. Tap Payments unifies major regional payment methods from the Middle East with international options like VISA, MasterCard, Amex and Apple Pay. Amex Business Link, a B2B online payments platform, automates processes like reconciliation (a form of book-keeping) and allows businesses to choose how they pay or are paid in real-time, while Santander Cash Nexus provides a single access point that consolidates 93% of all treasury operations in a single solution, processing payments using a global format.

These simplified cross-border payment solutions blend seamlessly into users' existing behaviours, requiring no understanding of the complex backend or onboarding onto new platforms.

2. Accessible, inclusive, fast and cost-effective

High-speed, cost-effective solutions significantly lower barriers to international trade for MSMEs and traditionally excluded customers, while promoting financial resilience. Circle reduced transaction fees by 40% and offers near-instant settlement through USDC, representing significant savings for Félix customers.

PayPal provides cross-border digital payment solutions that do not require a bank account, enabling broader participation, especially for those in rural or underserved areas. TerraPay helped Silent Roar Media lower the minimum threshold for royalty payouts from $250 to $50, with payments going directly and more frequently to mobile wallets for those without access to traditional banking.

Namutek, Kash’s parent company, is the first regional fintech connecting six Central American countries, providing real-time, 24/7 transfers. Beyond WhatsApp functionality, it allows users to send and receive money in real time between different banks using debit cards, bank accounts and QR codes. ARD App, designed for accessibility in even the most remote areas of Mongolia, allows for self-enrolment, customer verification and QR code payments.

Visa Virtual Cards enable MSMEs to efficiently manage secure domestic and cross-border payments, enhance control and visibility, and access credit for digital services abroad or importing goods.

MSMEs benefit from faster and more secure digital payments, as well as value-added services derived from leveraging their own data; from streamlining cash flow to enhancing customer experiences and expanding opportunities in the digital economy.

3. Success through strategic partnerships

Cross-border payment solutions are increasingly collaborative, with traditional and fintech/crypto players working together, blurring sector distinctions.

Buna partners with over 120 banks to power interoperability within and between countries in the Arab region across six currencies, aiming to make cross-border payments as efficient as domestic ones. ARD's partnership with Mongol Post enables access to remote areas, with the latter acting as a correspondent bank for remittances.

Decaf runs on Solana and Stellar blockchains to unlock seamless entry into decentralized finance, while still providing cash ramps through the cross-border payment platform MoneyGram. Tpaga is built in collaboration with Balam and Bitso, two Mexican fintechs, as well as Walgreens, a major US pharmacy.

TrustPayments, in collaboration with Visa Direct, allows merchants and customers to transact in native currencies, providing MSMEs with secure payment experiences leveraging Visa's cybersecurity.

The private sector is already driving more efficient and secure digital payment and trade finance solutions – but expanding collaboration across public-private, public-public and private-private partnerships is essential to further enhance trust, security and accessibility for all.

What's next? Policy, technology and innovation

While significant strides have been made, compliance with diverse regulatory frameworks – even within the same region – remains a challenge. Collaboration across public and private sectors is critical to address regulatory fragmentation and market disparities. The future of cross-border payments lies at the intersection of policy and technological innovation.

Key topics needing attention:

• Taxation disparities and other non-trade barriers. Different tax treatments across payment providers and jurisdictions, together with other non-trade barriers (e.g. capital requirements, opaque licensing regimes, domestic processing and data restrictions) affect market access. MSMEs may benefit from less-taxed channels in the short term, but this can delay their formalization into the economy, while providing an unfair advantage to certain payment providers.
• Competition and governance. In some cases, regulatory bodies find themselves balancing oversight with direct participation in instant payment systems, raising questions about market neutrality and fair competition. Fast payment systems, present in over 70 countries, allow for near-zero cost for sender or recipient in domestic transactions. While these systems can contribute to financial inclusion, they can result in market power shifts that favour certain parties. The upcoming interlinkage of these systems only reinforces the need for discussions on governance and oversight for cross-border payments.
• Security and consumer protection. New payment solutions, especially those using cryptocurrencies, vary in their degree of security, depending on blockchain technology, transaction reversibility and encryption. They face risks like volatility, unclear regulation, and potential for fraud or hacking. The anonymity of some solutions can also enable illicit activities, undermining trust. Automated tax clearance and blockchain documentation show promise but require policy coordination.
• Regulatory cooperation. Countries like the US and UK, among others, are developing regulatory frameworks for crypto assets, highlighting the benefits of international cooperation with digital assets increasingly crossing borders. The Berne Financial Services Agreement between the UK, Northern Ireland and Switzerland highlights the significant benefits that regulatory cooperation could bring for financial services, given that assets and activities will inevitably span multiple jurisdictions.

By fostering interoperability and prioritizing MSMEs’ needs, digital payment innovations can provide much-needed stability and inclusivity in an uncertain global economy. These advances ensure that cross-border commerce remains accessible and efficient for all participants, empowering MSMEs to drive economic growth, foster innovation and create a more equitable global trade landscape.

If you are interested in learning more about cross-border trade and payments, please email: [email protected]

DISCOVER

What is the World Economic Forum doing on trade facilitation?

The Global Alliance for Trade Facilitation is a collaboration of international organisations, governments and businesses led by the Center for International Private Enterprise, the International Chamber of Commerce and the World Economic Forum, in cooperation with Gesellschaft für Internationale Zusammenarbeit.

It aims to help governments in developing and least developed countries implement the World Trade Organization’s Trade Facilitation Agreement by bringing together governments and businesses to identify opportunities to address delays and unnecessary red-tape at borders.

For example, in Colombia, the Alliance worked with the National Food and Drug Surveillance Institute and business to introduce a risk management system that can facilitate trade while protecting public health, cutting the average rate of physical inspections of food and beverages by 30% and delivering $8.8 million in savings for importers in the first 18 months of operation.