Blockchain in cross-border payments: SMEs’ opportunity in international trade
August 31th, 2019 – Globalisation has transformed the world’s economy. While the first stage of economic change was driven primarily by large corporations who had the resources and supply chains to expand internationally, the next wave of economic growth will be shaped by the growing role of SMEs in global trade. Today SME cross-border payments represent a significant portion of the global B2B payments market, amounting to over $10-15 trillion annually. In fact, B2B payments are growing faster than C2C and B2C markets at 5-10% year.
Once the backbone of the domestic economy, SMEs now have more opportunities than ever to expand into new markets thanks to the recent innovations in payments and the rapid growth of international ecommerce. For instance, ecommerce platform operators such as Amazon and eBay have made it easier for SMEs to sell products abroad. Moreover, the rise of the digital economy has placed a stronger focus on agility and disrupted many industries — including retail, financial services, logistics and transportation, and manufacturing among others. This has provided a level playing field for start-ups and SMEs to compete with large enterprises.
Another big change has been the shift of global money flows. As emerging markets such as those in Southeast Asia and Latin America are increasingly important for global trade, cross-border payments are becoming a key driver of economic growth. In fact, the global payments market is expected to reach $2.9 trillion by 2022 according to data from McKinsey, and more than half of this growth ($1.6 trillion) is expected to come from Asia-Pacific. This a great opportunity for financial institutions operating in these markets and for the local economies, given that SMEs account for 60% of employment and 40% of national income in emerging markets.
Written by Global Banking and Finance
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