Fintech 21 March 22

Cross-border Ecommerce is changing and PSPs need to adapt

Stephane Vandenplas
By: Stephane Vandenplas
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Ecommerce’s share of retail sales has risen dramatically since the pandemic started, with Europe seeing an increase in cross-border sales of 35% in just one year. The UK has become the second most popular market for online cross-border shopping, topped only by the US and followed by China. A recent Ecommerce in Europe report reveals that when asked, 216 million consumers stated they have bought from an ecommerce site not based in their home country. In fact, as pandemic-related problems diminish in scope, cross-border shopping is expected to increase steadily.

The Cross-border Payment and Ecommerce Report 2012-2022 highlights that the compound annual growth rate is predicted to rise above 20% for the cross-border B2C ecommerce market during 2020–2027, and that earned revenue is estimated to reach more than $4 trillion by 2027. The global B2B ecommerce market is expected to reach $18.57 trillion by 2026.

This all adds up to a world of opportunity in the cross-border ecommerce market, and it shows no sign of slowing down. This is, of course, great news for merchants who have a whole new world of consumers to tap into. Traditional bricks and mortar retailers, who’ve already adapted to accept online payments during the pandemic, are now hungry to have a piece of the cross-border ecommerce pie and reap the rewards of more customers.

It’s the acquiring banks and Payment Service Providers (PSPs) who can help their customers, the merchants, take advantage of the opportunities offered by cross-border ecommerce who will be most in demand. They will be the payment partner helping merchants truly benefit from this new retail era.

What are PSPs?


Payment Service Providers, or PSPs (payment solution providers or merchant services providers), are financial institutions with the authority to process money transactions between merchants and their customers. They are third-party providers that allow merchants to accept payments in convenient ways, acting as the link between merchants, acquiring banks and payment card networks involved in any transaction. Merchants who sign up with PSPs open the door to accepting global and cross-border payments without opening branches or operations in other countries. 

Ecommerce is changing, and PSPs will need to keep up

The traditional market for cross-border commerce has made it challenging for PSPs to optimize their cross-border proposition, especially when serving the needs of their growing SME merchant base. The banking model for cross-border payments has historically involved hidden fees, high costs, delays and reconciliation issues, and continues to do so.

With the boom in cross-border ecommerce and a more geographically diverse client base, PSPs and acquirers will need to support a wider set of settlement currencies or face being supplanted by more agile players in the market. Similarly, with their merchants targeting an increasingly global consumer base, payment providers must be able to collect funds in more currencies or they will be seen as a hindrance to growth.

With payment volumes increasing exponentially, the revenue opportunities of taking control of the FX cannot be ignored. As processing margins are squeezed and the landscape continues to become more competitive, carving out a new revenue stream is more necessary than ever.

PSPs and acquirers can stand out in the cross-border ecommerce world by delivering additional value to their merchants. Providing multi-currency payment accounts is a very effective way of doing just that. It’s logical really. Merchants are now more likely than ever to have customers and suppliers globally, making a multi-currency solution of increasing value.

PSPs should look to access competitive FX rates and optimize settlements via local payment route networks to optimize their cross-border offering, however, potentially the most important value-add for payment providers to offer their merchants are unique, named multi-currency accounts.

Multi-currency accounts: the point of difference making all the difference

Companies like Revolut, Flutterwave and Sezzle already use Currencycloud to simplify business in a multi-currency world. Using Currencycloud’s APIs, PSPs and acquirers can provide real value for merchants who want to take advantage of cross-border commerce by offering them a multi-currency virtual account. This gives them access to over 35 currencies – all from one account, in their name, with no need to manage multiple providers.

This ‘bank in a box’ solution opens up exciting new markets and increased revenue streams for the payment providers, and also adds real value to their customer offering, it’s a win-win. PSPs and Acquirers get to offer an innovative cost-saving product to merchants, all while creating new revenue streams for themselves.

It’s true the ecommerce cross-border ecosystem is growing fast. But that doesn’t mean that PSPs and Acquirers can’t catch up.

The future of cross-border payments

International payments are crucial for businesses wanting to operate internationally, with the value of B2B cross-border payments set to exceed $42.7 trillion by 2026. These payments are essential for the free flow of goods and services across borders, driving investment and spending that fuels the global economy. And while banks have dominated this space for a long time, things are changing with new players emerging. These new players can offer more efficient cross-border payments utilising more modern technologies such as blockchain to eliminate manual processes and human error. 

As well as blockchain, new players in the cross-border payments market include central bank digital currencies and real-time payments (RTP), making these types of payments instantaneous.

Of course, AI is also playing its part, automating the entire process from generation to compliance, reducing the time and cost of payments. It can also use predictive analysis to forecast FX rates so businesses can lock in in advance. 

In an increasingly globalized marketplace and with the emergence of new technologies driving faster and more efficient cross-border payments, the move away from traditional banking has already begun. Without being bound by the regulations of banks, new Fintech companies are offering more agile and flexible services, so it is vital that merchants and other payment processes keep up. 

Feel free to reach out if you’re interested in discussing how Currencycloud can help PSPs and Acquirers optimize their cross-border offerings.

Stephane Vandenplas
By: Stephane Vandenplas
Stephane has held various commercial and operational roles across the online payments industry over the last 10 years. With extensive knowledge of the cross-border requirements and challenges facing Acquirers & PSPs, it's his role to optimise our offering to this part of the industry. Outside of Fintech, he will spend any free time travelling around the globe and is embracing our remote first culture to always keep exploring.

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