Digital wallets have been around for a long time. After being implemented in almost every part of the world, it can be said that digital wallets are here to stay. However, there are mixed feelings about the usage of these wallets. Some find it difficult to trust as it is missing that sense of security in the digital age, while some think of it as the ultimate upgrade to traditional payment methods.
While digital wallets have surely proven their usefulness over the years, if there’s one thing that everyone expects a digital wallet to shine, it is cross-border payments.
In this post, let us take a closer look at how digital wallets deal with different use cases and are digital wallets truly the future of cross-border payments.
So, shall we begin?
What are Cross-Border Payments?
Cross-border payments are transactions between two parties residing in different countries. Usually, it happens between a wholesaler and a retailer or a retailer and an individual. These payments usually take place through different channels such as bank transfers, credit cards, digital wallets, etc.
These payments seem similar to a transaction inside the same country however are much more complex. That is because, unlike traditional transactions, cross-border payments involve currency exchange and various intermediary charges. Not to forget, the waiting time for banks to settle cross-border transactions is very high, which makes the entire process further complicated for businesses.
Benefits of Cross-Border Payments:-
#1 - Access to Global Markets
With options to easily make payments across borders, an individual opens up new doors to global transactions, making global markets more accessible. This means if you want to buy something from another country, you can easily make payments and book it for yourself, without having to worry about the complexity of transactions.
#2 - Enhanced Remittances
For workers and students living in different countries away from home, cross-border payments are a life-saver. That is because it simplifies the entire process of remittance, sending money back home when in need. With the ease of cross-border transactions, a person does not have to think twice about remittances.
#3 - Ease of Business Transactions
Businesses that depend on imports and exports get a chance to explore more markets as making payments is easier. Thanks to cross-border payments, all the transactions, be it a token amount for booking goods or the final amount on receiving them can be carried out from the comfort of your home.
How Digital Wallets Simplify Cross-Border Payments?
Digital wallets are advanced applications that are directly connected to your bank accounts, helping you make digital payments instantly. These wallets can be used to keep your credit/debit card information intact and accessible all the time.
Now, when it comes to digital wallets working on cross-border transactions, there are several benefits that it offers. Some of those benefits are listed below -
Efficient Transfers at Faster Speed: With digital wallets, you can transfer funds instantly as the transactions are settled in real-time.
Robust Security Mechanisms: While using an e-wallet, you can experience highly secure fund transfers as it allows you to instantly verify the details of the receiver before going through the transaction.
Lower Transaction Fees: Your typical digital wallet transaction costs much less than a traditional Western Union transaction, making it highly useful for smaller transactions.
Ease of Accessibility: Digital wallets do not require any sort of system or hardware and can be accessed instantly through a smartphone. Cross-border payments become super accessible thanks to FinTech app development services that create apps supported by all types of smartphones.
Growing Availability of Smartphones: With smartphones replacing traditional phones in every part of the world, the use of digital wallets is going to rise, making cross-border transactions more convenient.
With all these benefits, digital wallets can truly simplify cross-border transactions. One of the key advantages of using an electronic wallet is that it can easily be integrated into any application, or banking method. From cryptocurrency to your bank account, everything can be accessed through a digital wallet, making it future-ready for cross-border payments.
Trends for Digital Wallets and Cross-Border Payments
Digital wallets are on a boom! The CAGR for digital wallet transactions in e-commerce alone is estimated to be 15 percent between 2023 & 2027. This means the use of digital wallets has already become a widely accepted practice.
As far as cross-border transactions are concerned, the wholesale cross-border payments for wholesale and retail markets are set to increase by 54% & 45% respectively, with digital wallets being the center of this growth.
With upcoming technological developments in banking and fintech, digital wallets will play an instrumental role in enhancing cross-border payments. Needless to say, the ability of digital wallets to get integrated with different services will open several doors for the future of transactions across borders.
Looking at these stats, it can be said that digital wallets will define the growth of real-time international transactions as one of the key factors in the future of cross-border payments. An e-wallet app development company or a digital currency expert can surely guide you on how you can capitalize on this growing cross-border payments market.
Conclusion
If you came to this post with a question about digital wallets being the future of cross-border payments, then you might have got your answer by now. Yes, digital wallets are going to play a really important role in enabling cross-border transactions. However, with multiple open banking technologies and real-time payments coming to the rescue, it is going to be interesting how things unfold.
Hope this post helps you understand the benefits of digital wallets enabling cross-border payments and gives you an idea of what the future holds for cross-border transactions. That will be all for this one. Good luck!
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