A future for simple and frictionless cross-border payments

We sat down with Christophe Bourbier, CEO of Thunes Collections, to discuss the most recent trends that redefined the payments landscape and learn more about cross-border payments and their potential to further impact this sector

What are the trends and developments that came to the fore earlier than anticipated and redefined the global payments industry? 

In the last two years, we all noticed that the COVID-19 pandemic had a massive impact on consumers’ purchase behaviour, stimulating the digitalisation of the purchase experience in terms of UX for the entire payments and commerce space. 

When it comes to payment options, credit cards have been an important part of the digitalisation process, but the walletisation phenomenon is driving a recent trend toward the use of e-wallets, as the consumers found it more convenient and quicker to use. According to the latest FIS report, e-wallets accounted for 44.5% of the ecommerce transaction volume in 2020, remaining a popular payment method among global ecommerce consumers. 

Another strong trend that gained ground recently is represented by QR codes. Even though the technology is not new, today QR codes are everywhere, enabling a smoother buying and paying experience. The growth of alternative payment methods, such as e-wallets and QR codes, has been overwhelming in the past few years, while legacy forms of payments continue to decline. For instance, BNPL has become a popular option for purchase because it is offered by more big retailers nowadays as well as small and medium-sized merchants – which was not the case several years ago. Consequently, the global BNPL market is expected to reach USD 20.40 billion by 2028. 

Therefore, all these new trends, such as click and collect, delivery services, e-wallets, QR codes, and instalments, existed before the pandemic. However, they flourished in the last two years, and now they are used by more shoppers than ever before, streamlining the digital purchase experience and contributing to the spectacular growth of the ecommerce sector. Figures show that global ecommerce sales represent a USD 4.2 trillion market, forecasted to reach USD 5.4 trillion by 2022. The overall gross domestic product (GDP) of the US represents USD 22 trillion, and if you compare it with the global ecommerce market, the latter represents one fifth of the GDP of the US. France’s GDP is at USD 2.5 trillion – which means that the global online commerce sector is becoming as massive as the GDP of big countries. 

There is no doubt that the world is on the cusp of a digital transformation, and consumers embrace alternative payment methods faster than ever before. But what is the main, common trend behind their success? 

We need to consider two stakeholders when analysing the usage of payment methods: the buyers and the sellers (the retailers or marketplaces that sell products online or in-store). And we must take into account the fact that the credit card has been designed decades ago for the in-store payment experience. It hasn't been designed to be used online or to be integrated in an application, and it doesn’t bring any added value. Therefore, every innovation in payments that has provided an easier onboarding, a streamlined authentication, a simpler payment process, or value-added services around the payment has met a great success. 

This is why Chinese consumers don’t use credit cards. They prefer using Alipay, WeChat, QR codes, and e-wallets. In countries where people are unbanked, every payment solution that could provide them with the missing link or better said with the ability to pay has also met huge success. That's why in Africa, for instance, you can find a lot of mobile wallets, such as M-PESA. And the main, common trend that links all these alternative payment solutions that have been launched in the last five to ten years is the inability of credit cards to offer a seamless UX for online shoppers around the world. 

If we are to think about the B2B and B2C space, what can be done to support businesses in catering to these burgeoning payment requirements of their customers? 

Previously, we mentioned two types of stakeholders: the buyers and the sellers. And the sellers aim for an UX and a payments process that are as seamless as possible. They also wish to be protected from any type of fraud, and they want the payment itself to be cheaper and faster. So, on one hand, the consumers are happy to use value-added types of payment methods that make the buying experience less cumbersome. On the other hand, the merchants and marketplaces – B2C and B2B – want to simplify the entire process, to be paid quicker and with less costs, and to manage fraud or reconciliation more easily. Therefore, there is just one missing component here, if we may say so. There are more and more attractive payment methods around the world – easy to use, less costly, providing a seamless experience, with better conversion rates, well-adapted to the digital experience – but they are competing against card networks such as Visa and Mastercard. And the missing piece is represented by the international perimeter that these card networks already have and the potential interoperability of alternative payment methods. Many of them are very local and easy to use in the regions where they have been designed, but when it comes to cross-border online sales, things get trickier. 

This is what we bring at Thunes: we provide users who want to employ an alternative payment method anywhere in the world with the ability to actually use it globally. Additionally, merchants want to offer all the payment methods that are being used worldwide, regardless of the country where they want to sell their products and services. In response to the industry needs, at Thunes we are building an international network of alternative payment methods to make sure that any merchant that wants to sell anywhere in the world just needs to integrate one single API. Thus, we want to make sure that the diversity that you find among all those easy-to-use payment methods is accessible to all the international merchants. The other way around, we also want the buyers who are using Alipay in China, MB WAY in Portugal, or M-PESA in Africa, for instance, to stop asking themselves if that payment method would be accepted in the countries where they are going to travel or when making purchases. 

In the next couple of years, what flourishing trends have the potential to reshape the payments landscape? 

I believe that one of the most relevant trends for the industry is represented by cross-border payments, due to all the challenges that exist in this space and the many things that still need to be done. We've been talking about the e-market, and we need to also consider the specificity and complexity of cross-border payments in the digital world. 

We mentioned that the digital world is forecasted to reach USD 5.4 trillion by 2022. If you take a step back and think about all the cross-border transactions – not just the online transactions or the digital transactions – that happen between countries, corporates, companies, on marketplaces, in between individuals, this market of global cross-border payments is expected to reach USD 156 trillion in 2022. So, the overall cross-border transactions market in the world is forecasted to be 30 times bigger than the global ecommerce market. 

Here, in this incredibly big market, everything that regards cross-border payments in between fast-growing countries or regions (like Africa) and developed countries or regions (like Europe) – so every transaction happening in between Africa and Asia, Asia and LATAM, the US and LATAM, the US and Africa – is very complex because of the diversity, hidden costs, FX, many different currencies, and so on. Nowadays, it’s quick and not very expensive to do a cross-border payment in between the US and Europe. But when it comes to fast growing countries, it becomes extremely difficult to receive or send money across borders, and it's even more complex when you want to do that in a digital world, because all the alternative payment methods come into the picture. 

To conclude, I believe this is going to be one of the next decade’s biggest trends: how to make cross-border transactions – digital and non-digital, B2C and B2B, in between emerging countries or in between developed countries and emerging countries – seamless, easy to track, not that costly, and with good conversion rates. How to make cross-border payments, in the next few years, as simple as the contactless credit card payments that we do today in Europe or in the US – and that's what we're going to enable at Thunes. 

About Christophe Bourbier 

Graduated from the University of San Diego in California with a master’s degree in Business and International Relations, Christophe Bourbier is a born entrepreneur and an executive with over 20 years of experience in competitive and disruptive strategy. Competitor at heart and captivated by international affairs, before founding Limonetik (now, Thunes Collections) in 2007, Christophe had created different companies in High Tech and Communications. 

About Thunes 

Thunes is a B2B company that powers payments for the world’s fastest-growing businesses. Thanks to a single API connection, customers reach new markets and multiple payment options in over 100 countries without the need for countless integrations to multiple systems. Today, more than 100 banks, payment service providers (PSPs), money transfer operators (MTOs), mobile wallet operators, platforms, and fintech companies around the world use us to process cross-border payments in a cheaper, faster, more transparent, and more secure way.