The world of cross-border payments has always been subject to change, but the industry continues to grow at a previously unimaginable pace. Fintechs are emerging almost on a weekly basis and the range of payment options is wider than ever. For many long-established brands, this has proven difficult, but MasterCard
Stephen Grainger, executive vice president of Cross, says, “There are a lot of people at play in that access space, but the assets we’ve compiled and the distribution capabilities we put together allow us to reach 90% of the world’s population.” ” Limit services on MasterCard.
“We do this through giving customers the ability to have access to a variety of rails. They can come to us and they can deliver in card, they can deliver via cash, they deliver in wallet. can, and they can distribute them to bank accounts.
The service is provided through MasterCard Cross-Border Services, a branch of MasterCard that provides banks, non-bank financial institutions and digital partners support for any purpose internationally with support for over 100 countries and over 50 currencies. Allows you to send money. Such versatility is important, but Grainger highlights trust as being equally important to succeed in the current cross-border landscape.
“Our customers are generally banks, other financial institutions, many of which have gone through a very painful process during the last 10 years in terms of handling the output of regulations, shrinking networks and reducing their ability to pay to beneficiaries. are straight,” he says.
“We have helped bridge a significant gap for many customers, but that in itself is not enough. Along with enabling access to all those end points, we have built confidence while ensuring a predictable and certain outcome. Made it. “
While the company is rapidly developing its offering to respond to the micro-market, what Grainger describes as the company’s “ultimate North Star” is its network.
“The network is constantly evolving the state into the next form of good,” he says.
“The next step is to build more connectivity directly with the underlying clearing platforms, where it makes sense, especially in high-volume events, but building and expanding the network is never-ending.”
This growth also extends to the extent to which the company enables customers to use the network, not how many endpoints it has.
“Over the past 50 years we have created a really attractive proposition that enables customers to transfer money in and out of their bank account via card,” Grainger says.
Flexibility in cross-border payments: Mastercard offers
MasterCard’s capabilities mean that it provides real-time payments in all markets that support them, and as close as can be supported in the rest of the market. Grainger says this enables the company’s customers to tailor its service to the particular needs of its customers — a mindset that’s reflected in its broader approach.
“What we are trying to do is to figure out what is the most compelling way for our customers to be able to meet their underlying customer needs and enable a better experience,” he explains.
“Reach is not enough. We are finding out what are the other very important trends that affect clients, whether they maintain more economics on their flows; how do they manage risks. Liquidity in the market What are the effects of the change? What is the effect of interest rate on it?
“We try to overlay some of those challenges with new technologies, and find different ways to streamline the flow and be able to provide services to our customers that give us another opportunity to move forward. allow us to be able to make more attractive offers.”
This flexibility is particularly important in the modern banking landscape, where neobanks that cater to specific audiences sit alongside large and established banking players. And this broad customer type is reflected in how Mastercard is developing its cross-border payments offering.
“What Mastercard does particularly well is the deliver scheme. It provides the ability to provide a service level and a service offering that has a range of known inputs and known outcomes – that’s how the card network operates,” Grainger says.
“What we are focusing on is the delivery of a multilateral planning model that allows any participant to play in that ecosystem, in a more effective, risk-managed manner, with core propositions of transparency, predictability, certainty. Through a single means, it strengthens a secure and secure connection.”
Changing cross-border payment use cases
One area that Mastercard has long focused on is low-value payments, defined as less than $100,000 and which Grainger says account for about 73% of all payments. That number has grown “significantly” in the past decade due to the “explosion in e-commerce, the emergence of the gig economy, and global migration, which has forced an ever-increasing amount of remittance transfers.”
Notably, low-value payments differ from their higher-value counterparts in terms of business, which is why MasterCard sees them as a huge opportunity.
“There is always noise on the sidelines, but largely SWIFT, as a messaging platform based on correspondence banking, works great for high value payments. When you start thinking about low value, So it becomes a lot more problematic,” Grainger says, while the company focuses on them because of not only the low-value payouts, but the potential to “differentiate.”
The use cases for this cover are vast, but include both remittances and disbursements, including tuition payments, marketplace funds, gig worker payments and many others that are increasingly being described as new payment flows.
meeting the G20 remittance target
Within the broader geopolitical landscape, there is a broader push to “solve remittances,” Grainger says, as seen by the G20 goal to reduce the cost of migrant remittances.
This essentially provided pressure for companies like Mastercard, although Grainger sees technology as key to tackling the issue.
“There is going to be silver bullet technology and use technology to help weed out and manage as many friction points as possible,” he says.
However, he raised concerns over fintechs, which are focusing on zero remittance costs, arguing that while they can reduce pricing, they often do so in an unsustainable manner.
“We have to applaud them for what they’ve done, and they’ve inspired attention, engagement in space; they’ve brought new ideas. They’ve actually created, expanded and catapulted, in some cases, some sort of use cases.” but very few of them are profitable,” he says.
“We’ve seen pricing drive down over time, but what really happens at a time is if the business model is something more about how I get bought by someone, then it’s going to be a problem for someone else down the line.” Keeps the line. However, the focus must be on the customer to ensure a sustainable future.”
Digital currencies in the future cross-border payment landscape
Looking to the future, Grainger sees that the future of MasterCard is being impacted by significant changes in the global cross-border payments landscape, and in particular a move towards building a “standardized operating environment” on a global scale.
He highlighted the growing discussion about using stablecoins or central bank digital currencies to underscore this, saying that “there is clearly going to be a shift in that direction”, however, he argues that cross-border Due to the friction for payments to and from there eventually need to be converted back to fiat currency.
“At the end of the day, we may have value stored in a token, but at some point the on-ramp and off-ramp of that token in fiat, which still needs to be dealt with in a more efficient and compelling way.” This, he said, is reflected in the distributed finance space where fiat currency conversion remains the main friction point.
“We will undoubtedly see a significant trend towards token usage, but I think there is a real opportunity for the industry to catch up with the meaning of on-ramp and off-ramp in those tokenized environments.”