PitchBoo-k分析師注：貨幣十字路口：跨境支付深度探索（英）-2024-53正式版WN8

PitchBookData,Inc.

NizarTarhuniExecutiveVicePresidentof

ResearchandMarketIntelligence

PaulCondraHeadofEmerging

TechnologyResearch

InstitutionalResearchGroup

Analysis

EMERGINGTECHRESEARCH

CurrencyCrossroads:ACross-

BorderPaymentsDeepDive

Exploringmodernsolutionstoage-oldchallengesin

globalfinance

RudyYang

SeniorAnalyst,Emerging

Technology

rudy.yang@

PitchBookisaMorningstarcompanyprovidingthemostcomprehensive,most

accurate,andhard-to-finddataforprofessionalsdoingbusinessintheprivatemarkets.

Data

MatthewNacionalesSeniorDataAnalyst

Notesnapshotpbinstitutionalresearch@

Publishing

DesignedbyJuliaMidkiff

PublishedonJuly29,2024

Definition:Cross-borderpaymentsaretransactionsthattakeplacebetweentwo

partiesindifferentcountries.Theyarecategorizedaswholesaleorretailpayments.

Wholesalepaymentsarehigh-valuetransactionsbetweenlargeentities,andretail

paymentsarelower-valuetransactionsamongconsumersandbusinesses.Thebulk

ofcross-bordertransactionsarewholesale.

Contents

Notesnapshot1

Introduction2

Market:Internationalpaymentflowstotaled$190trillionin2023andareprojected

toreach$290trillionin2030.1Inthisperiod,wholesalepaymentsareexpectedto

grow54%andretailpaymentsareexpectedtogrow47%.B2Be-commercehas

thefastestprojectedgrowthrateintheretailmarketsat120%,followedbyB2C

paymentsat83%.2

Definingthecross-borderpayments

market

3

Thecross-borderpaymentslandscape6

Marketdynamicsandshiftingtrends9

Shiftingtrends:Marketforcessuchasglobalization,supplychainadjustments,

evolvingforeigninvestmentflows,enhancedfinancialinclusion,improvements

inpaymentinfrastructure,andtheriseofAIaretransformingglobal

paymentprocesses.

Sorry,doyouspeakISO20022?18

Nowboarding:Yourcross-borderpayment23

Thestateofcross-borderpayments29

Revenuepool:Revenuesfromcross-borderpaymentstotaled$193.3billionin2023.3

WholesaleandretailB2Bpaymentsmadeup79.6%ofthistotal.27.8%ofthese

revenueswerefromNorthAmerica,and25.8%werefromAsia-Pacific(APAC).

Manyplayers,onegoal34

Dealenvironment50

Theproblem:Transactingacrossborderscanbeslow,expensive,andopaque

becausepaymentsystemsarenotinteroperableandnoteveryonecanhavean

accountatthesamebank.Instead,weconnectbankaccountsinthesamewaywe

useconnectingflightstoreachdestinations.Thisinefficientprocessisknownas

correspondentbankingandisthebackboneofcross-borderpayments.

Thesolutions:Cross-borderpaymentsarebecomingstreamlinedasmorefinancialnetworkslinktogether.Somecompaniesaremakingthispossiblewiththeirown

1:“Cross?BorderPaymentsMarketSizingData,”FXCIntelligence,n.d.,accessedJuly16,2024.

2:“HowBigIstheB2BCross?BorderPaymentsMarket?2030’s$56TNTAM,”FXCIntelligence,LucyInghamandJamesMcKee,April27,2023.

3:“Fintech2025+,”Convera,June5,2024.

1

PitchBookAnalystNote:CurrencyCrossroads:ACross-BorderPaymentsDeepDive

infrastructurescreatedfromdirectconnections.Othersarefindinginnovative

waystobypasscorrespondentbankingbyusingblockchain.Paymentsystemsare

alsobecomingincreasinglyinteroperablewiththeglobalmigrationtoISO20022,a

modernmessagingstandard.

Whowins:Thisisnotawinner-takes-allmarketbecausecross-borderpayments

involvemultiplecomponents.Companiesprovidinginfrastructure,modernbank

cores,complianceexpertise,cardissuing,paymentprocessing,remittances,digital

wallets,andblockchainsolutionsallhavesignificantroles.Centralbanks,regulators,

legacymoneytransferoperators(MTOs),establishedfintechcompanies,andmajor

cardschemesalsohavearoletoplay.

Dealenvironment:Inthefirsthalfof2024,cross-borderpaymentcompaniesraised

$318.4millioninventurecapital,representing2.3%ofoverallfintechdealvalue.In

2023,VCdealvalueincross-borderpaymentstotaled$445.3million.Dealactivity

inthisspacehasbeensignificantlyweightedtowardenterprisecompanies,which

havecaptured78.5%ofYTDVCdealvalue.Inthisperiod,Europeancompanies

secured55.2%oftotalcross-borderpaymentsVCdealvalue,followedby21.1%for

Asiancompaniesand15.3%forNorthAmericancompanies.

Introduction

Thecross-borderpaymentsindustryrepresentsamassivemarket,withnearly$200

trillioninpaymentflows.4Traditionalmethodsoftransferringmoneyinternationally

havebeenplaguedbyinefficiencies,leadingtohighcosts,slowspeeds,andpoor

userexperiences.Thesechallengesstemfromahistoricallackofstandardized

datamessagingandlimitedinteroperabilitybetweenpaymentsystems.Overthe

pastfewdecades,thefintechindustryhasbeenstrivingtoaddresstheseissues.

Althoughsignificantprogresshasbeenmade,substantialopportunitiesremainto

alleviatepainpointsinmanyregionsaroundtheworld.

Thisnoteoffersacomprehensiveoverviewofthecurrentstateofcross-border

paymentsandtheinnovationsreshapingtheindustry.Webeginbydefiningthe

cross-borderpaymentsmarketanditssize.Wethenexploreshiftingdynamicsand

notableglobaltrendsaffectinginternationalmoneyexchanges,withafocusonthe

adoptionofthemodernpaymentmessagingstandardISO20022.Inthesecond

halfofthenote,wedelveintotherootcausesofcross-borderpaymentchallenges,

thecurrentlandscape,thepivotalroleoffintechcompanies,andthestateofVC

investmentinthisspace.

4:“Cross?BorderPaymentsMarketSizingData,”FXCIntelligence,n.d.,accessedJuly16,2024.

2

PitchBookAnalystNote:CurrencyCrossroads:ACross-BorderPaymentsDeepDive

Definingthecross-borderpaymentsmarket

Cross-borderpaymentsarecategorizedas

wholesaleorretailpayments.Wholesale

Marketsize

paymentsmakeupthebulkoftotalpayment

flowsandhaveahigherprojectedgrowth

ratethanretailpayments.Revenuesfrom

Cross-borderpaymentsaredividedintotwoprimarycategories:wholesale

paymentsandretailpayments.

facilitatingcross-bordertransactionsare

derivedmostlyfromB2Bpaymentsand

Wholesale

generatedmostlybyNorthAmericaandAPAC.

?Definition:High-valuecross-bordertransactionsthataretypicallyconducted

betweenfinancialinstitutions,corporations,governments,andother

largeentities.

?Examples:Importsandexports,tradingofcapitalmarketsinstruments,

exchangesofUSTreasuries,oilpurchases,foreignexchangesettlements,loans,

andcorporatefunding.

?Transactionvolumes:In2023,wholesalecross-borderpaymentflowstotaled

$145.6trillion.518.1%camefrominstitutionalinvestors,17.7%fromhedgefunds

andproprietarytradingfirms,1.6%fromgovernmentsandcentralbanks,and

62.6%fromotherbanksandinvestors.

Retail

?Definition:Cross-borderpaymentsamongconsumersorsmallbusinessesthat

involvesmalleramountsofmoney.

?Examples:Onlinepurchasesfromaninternationale-commercewebsite,

remittancessenttoandfromindividuals,andtouristspayingforgoodsor

serviceswhileabroad.

?Transactionvolumes:In2023,retailcross-borderpaymentflowstotaled$44.2

trillion.638.9%camefromlarge-enterpriseB2Btransactions,23.5%from

small-and-medium-size-enterprise(SME)B2Btransactions,22.6%fromB2B

e-commercetransactions,7.0%fromconsumer-to-business(C2B)transactions,

4.1%fromconsumer-to-consumer(C2C)transactions,and3.8%from

B2Ctransactions.

Combined,cross-borderwholesaleandretailpaymentflowstotaled$189.8trillionin

2023,with76.7%comingfromthewholesalemarket.7AccordingtoFXCIntelligence,

totalcross-borderpaymentflowswillsurpass$290trillionby2030,representinga

CAGRof6.3%.8Thewholesalemarketisexpectedtocontributeslightlymoretothis

growth,withaprojectedgrowthrateof54%comparedwiththeretailmarket’s47%.

However,keysegmentsintheretailmarketareexpectedtowitnesssignificant

growthby2030.B2Be-commerceisanticipatedtogrowthefastestat120%,

5:“Cross?BorderPaymentsMarketSizingData,”FXCIntelligence,n.d.,accessedJuly16,2024.

6:Ibid.

7:Ibid.

8:Ibid.

3

PitchBookAnalystNote:CurrencyCrossroads:ACross-BorderPaymentsDeepDive

reachingpaymentflowsof$21.9trillion.9B2C,C2B,andC2Cpayments,whilethe

smallestmarkets,areprojectedtohavethenext-highestgrowthratesof83%,82%,

and80%,respectively,reachingmarketsizesof$3.2trillion,$5.6trillion,and$3.3

trillion,respectively.10Bycontrast,B2Bcross-borderpaymentsbylargeenterprises

andSMBsareexpectedtoseethelowestgrowthratesof15%and10%,respectively,

reachingmarketsizesof$1.9trillionand$19.7trillion,respectively.11Despitetheir

slowergrowthrates,thesetwomarketsareexpectedtoconstitutethebulkofretail

cross-borderpaymentflowsin2030.

Cross-borderpaymentvaluesin2023*

$26.3T

Wholesale,institutionalinvestors

$17.2T

B2B,largeenterprises

$91.2T

Wholesale,otherbanks&investors

$25.8T

Wholesale,hedgefunds&

proprietarytradingfirms

$10.4T

B2B,SMEs

$10.0T

B2B,

e?commerce

$3.1T

C2B

$1.8T

C2C

$1.7T

B2C

$2.3T

Wholesale,government&

centralbanks

Source:FXCIntelligence?Geography:Global?*AsofApril23,2024

Revenuepool

Revenuesfromcross-borderpayments,generatedfromtransactionfees,totaled

$193.3billionin2023.12B2Bpayments,spanningbothwholesaleandretailmarkets,

accountedfor79.6%ofthistotal,or$153.8billion.Theremainderwasdivided

amongC2Bpaymentsat10.5%($20.3billion),B2Cpaymentsat5.3%($10.3billion),

andC2Cpaymentsat4.6%($8.9billion).

2023’scross-borderpaymentrevenueswerederivedprimarilyfromNorthAmerica

andAPAC,whichaccountedfor27.8%and25.8%ofthem,respectively,or$53.7

billionand$49.9billion,respectively.13Europe,thenext-largestcontributor,

generated20.4%,or$39.4billion,oftherevenuepool.Together,thesethreeregions

produced74.0%ofthecross-borderpaymentsrevenuepoolduetotheirstrong

paymentinfrastructures,usageoffasterpaymentsystems,anddigitaladoption.

Theremainingregions,LatinAmerica(LATAM)andtheMiddleEast&Africa(MEA),

9:“HowBigIstheB2BCross?BorderPaymentsMarket?2030’s$56TNTAM,”FXCIntelligence,LucyInghamandJamesMcKee,April27,2023.

10:Ibid.

11:Ibid.

12:“Fintech2025+,”Convera,June5,2024.

13:Ibid.

4

PitchBookAnalystNote:CurrencyCrossroads:ACross-BorderPaymentsDeepDive

generated16.3%and9.7%oftherevenuepool,respectively,or$31.5billionand

$18.8billion,respectively.14Whilepaymentinfrastructuresarenotasdeveloped

intheseregions,increasingdigitaladoptionandaccesstofinancialservicesare

drivinggrowth.

Cross-borderpaymentrevenues($B)bysegmentin2023*

$10.3$8.9

$20.3

B2B

C2B

B2C

C2C$153.8

Sources:PitchBook;Convera;BCCResearch-IFT267ACross-borderPayments:GlobalMarketTrendsandForecast

(2022-2027)?Geography:Global

*AsofJune5,2024

Cross-borderpaymentrevenues($B)byregionin2023*

$18.8

$53.7MEA

$31.5

LATAM

Europe

APAC

NorthAmerica

$39.4

$49.9

Sources:PitchBook;Convera;BCCResearch-IFT267ACross-borderPayments:GlobalMarketTrendsandForecast

(2022-2027)?Geography:Global

*AsofJune5,2024

14:“Fintech2025+,”Convera,June5,2024.

5

PitchBookAnalystNote:CurrencyCrossroads:ACross-BorderPaymentsDeepDive

Thecross-borderpaymentslandscape

Thecross-borderpaymentslandscape

involvesmanyparticipants,suchasbanks,

fintechcompanies,MTOs,paymentschemes,

Facilitatingacross-borderpaymentiscomplexandofteninvolvesmanydifferent

players.Belowisahigh-leveloverviewofthemainparticipantsinthelandscape:

andregulators.

?Banks:Banksplayacentralroleincross-borderpaymentsandactasaprimary

interfacebetweencustomersandthepaymentssystem.Theyfacilitatecross-

borderpaymentsbymaintainingnostro/vostroaccounts(explainedingreater

detaillaterinthisnote),communicatingpaymentdetails,integratingwith

paymentrails,andensuringcompliancewithregulatoryrequirements.Bankscan

alsoserveascorrespondentbanksforotherfinancialinstitutions,supportingthe

correspondentbankingsystemthatunderpinscross-bordertransactions.Banks

thatprocesscross-borderpaymentsincludeJPMorganChase,HSBC,Citibank,

RoyalBankofCanada,andCrownAgentsBank.Bankscanalsobeinnovators

ofcross-borderpaymentapplications.Forexample,inJanuary2024,HSBC

launcheditscross-borderremittanceappZing.

?Centralbanks:Centralbanks,suchastheUSFederalReserve,theEuropean

CentralBank(ECB),andtheMonetaryAuthorityofSingapore,playacrucial

regulatoryandoperationalrolebyoverseeingnationalpaymentsystems,

managingforeignexchangereserves,andestablishingpaymentstandardsand

initiatives.Centralbanksdrivepaymentinnovationwithintheirjurisdictions;

forexample,theBankofEngland(BoE)mandatedtheadoptionofISO20022

forClearingHouseAutomatedPaymentSystem(CHAPS)payments.Moreover,

centralbanksareincreasinglyexploringcentralbankdigitalcurrencies(CBDCs)

forcross-bordertransactions.Forinstance,theBankofThailand,HongKong

MonetaryAuthority,People’sBankofChina,andtheCentralBankoftheUnited

ArabEmirateshavebeentestingamulti-CBDCplatformforseamlesscross-

bordertransactionsamongtheirrespectivecountries,knownasProjectmBridge.

?MTOs:MTOsspecializeininternationalmoneytransfers,providingcustomers

withanalternativetodirectlyinterfacingwithbanks.Traditionally,MTOswere

widelyusedforservicessuchaswiretransfersandcashpickups.Toenablethis,

MTOsactedasanintermediarybetweensendersandreceiversandcoordinate

themovementoffundsonthebackendviatheirnetworkofbanksandagents.

Withthearrivalofthedigitalage,MTOshaveadaptedbyallowinguserstosend

andreceivefundsthroughavarietyofmodernpaymentmethods,suchascards,

digitalwallets,cryptocurrency,andsuperapps.Well-knownMTOsinclude

WesternUnion,MoneyGram,andRiaMoneyTransfer.AlthoughMTOsarefacing

fiercecompetitionfromnewfintechcompanies,theystillprocessaconsiderable

volumeofpayments.AsofQ12024,WesternUnionprocessed283.1million

transactionsforconsumersonatrailing12-month(TTM)basis(a5.0%increase

YoY),yieldingthecompany$4.0billioninrevenues(a2.4%increaseYoY).15,16

15:“FirstQuarter2024FinancialResults,”WesternUnion,April24,2024.

16:“QuarterlyResults,”WesternUnion,n.d.,accessedJuly16,2024.

6

PitchBookAnalystNote:CurrencyCrossroads:ACross-BorderPaymentsDeepDive

?SocietyforWorldwideInterbankFinancialTelecommunication(Swift):

Developedin1973,Swiftisamessagingsystemusedforinternationalpayments.

Thenetworkitselfdoesnotmovemoney.Instead,itprovidesastandardized

systemofcodesforbankstosecurelycommunicatepaymentinstructionsand

details.Swiftcurrentlyconnectsover11,000banks,financialinstitutions,and

corporationsacross200countries,17averaging44.8millionmessagesperday.18

Inrecentyears,Swifthaslaunchedadditionalinitiativestohelpimprovecross-

borderpaymentsfacilitatedviaitsnetwork.In2017,SwiftlaunchedSwiftGlobal

PaymentsInterface(GPI),anenhancedsystemforcross-borderpayments

thatimprovessettlementtimesandtransparency.In2021,Swiftlaunched

SwiftGo,anupgradedsystemlikeSwiftGPIthatisdesignedtosupportlow-

valuepayments.

?Paymentrails:Paymentrailsaretheinfrastructurethatsecurelyfacilitatesthe

actualtransferandsettlementofmoneybetweenfinancialinstitutions.Ata

highlevel,twotypesofsettlementrailsexist:deferrednetsettlement(DNS)and

real-timegrosssettlement(RTGS)rails.DNSrailsaretypicallyusedforlow-

value,high-volumepaymentsandutilizeabatchprocessingmethodtopromote

moreefficientliquiditymanagement.ExamplesofDNSrailsincludeAutomated

ClearingHouse(ACH)intheUS,BacsintheUK,andFastandSecureTransfers

(FAST)inSingapore.RTGSrailsprocesstransactionsinrealtimeandare

generallyleveragedforurgentandhigh-valuepayments.However,becausethey

provideimmediateandfinalsettlement,theyrequiremoreliquidity.Examplesof

RTGSrailsincludeFedNowintheUS,PixinBrazil,andT2inEurope.

?Cardnetworks:GlobalcardschemessuchasVisaandMastercardprovide

theirowndedicatedinfrastructuretofacilitatecross-borderpayments.They

processcreditanddebitcardtransactionsbycommunicatingwithinaclosed

networkofbanks,aswellaswithintheirrespectiveprocessors.Thesepayment

messagestypicallyusetheISO8583standard,althoughmajorcardnetworks

havedevelopedsupportforISO20022.Beyondconsumerpayments,these

cardschemesalsofacilitatecross-borderB2Btransactions.Visa’sB2BConnect

service,launchedin2019,usesblockchaintechnologyandamultilateral

networkofbankstobypasscorrespondentbanking,thusenhancingsecurity,

transparency,andspeed.Similarly,MastercardTrack,launchedin2018,

leveragesMastercard’sglobalnetworkandintegrateswithinstantpaymentrails

tostreamlinecomplianceandreducepaymentprocessingtimes.Cardnetworks

processasubstantialvolumeofcross-borderpayments.AsofQ12024,Visa

processed$8.3trillionininternationalpaymentsonaTTMbasis(a7.7%increase

YoY)andrecognized$12.1billionininternationalpaymentnetrevenues(a10.2%

increaseYoY).19

?Regulatorybodies:Theseorganizationsestablishrulesandstandards

governingcross-borderpaymentstoensuresecurity,preventfinancialcrimes,

andsafeguardconsumers.ExamplesincludetheFinancialActionTaskForce

andtheFinancialCrimesEnforcementNetwork,whichsetglobalstandards

forcombatingmoneylaunderingandterroristfinancingincross-border

17:“SwiftHistory,”Swift,n.d.,accessedJuly16,2024.

18:“SwiftFINTraffic&Figures,”Swift,n.d.,accessedJuly16,2024.

19:“QuarterlyResults,”Visa,n.d.,accessedJuly16,2024.

7

PitchBookAnalystNote:CurrencyCrossroads:ACross-BorderPaymentsDeepDive

transactions.AnothersignificantentityistheBankforInternationalSettlements,

ownedby63centralbanksworldwide,whichplaysapivotalroleinenhancing

cross-borderpayments.ThroughitsCommitteeonPaymentsandMarket

Infrastructures,theBankforInternationalSettlementsdrivestheimplementation

ofkeyinitiativesundertheG20’scross-borderpaymentsagenda.

?Fintechcompanies:Fintechcompanieshavedevelopedinnovativesolutionsto

makecross-borderpaymentsfaster,cheaper,andmoretransparent.Solutions

fromfintechcompaniescancomeinmanyforms,whichwediscussindetaillater

inthisnote.Atahighlevel,fintechcompaniescanhelpprovidebetterpayments

infrastructure(asseenwithAirwallexandRapyd),bankingcoresandpayment

railintegrations(10xandFinzly),peer-to-peer(P2P)paymentapplications(Wise

andRemitly),multicurrencybankingservices(RevolutandN26),B2Bglobal

payoutandcollections(PayoneerandPayQuicker),andissuingandacquiring

services(StripeandMarqeta).

?Blockchaincompanies:Manyfirmsutilizeblockchainanddistributedledger

technologytofacilitatefasterandcheapercross-borderpayments.Key

advantagesofusingcryptocurrenciesandblockchainsolutionsincludefaster

speeds,enhancedtransparencyandtraceabilitythroughdecentralizedledgers,

eliminationofoperating-hourlimitations,andprotectionagainstcurrency

fluctuations.AprominentexampleisRipple,whichconnectsbanksand

paymentprovidersonitsdecentralizedglobalnetworkRippleNetandusesits

XRPcryptocurrencyasabridgecurrencyforquickertransactions.Another

exampleisStellar,ablockchainplatformthatoffersfastandlow-costcross-

borderpaymentsforindividualsandsmallbusinesses.MTOsarealsofinding

valueinblockchain,asdemonstratedbyMoneyGram’spartnershipwithStellar,

whichenablesuserstoseamlesslyconvertbetweencashandUSDC,awidely

useddigitaldollarstablecoin.Inaddition,banksarebeginningtoinnovatewith

blockchain,asseenwithJ.P.Morgan’sdevelopmentofitsstablecoinJPMCoin

andSantander’slaunchofOnePayFX,ablockchain-basedmobilepayment

servicethatleveragesRipple’sRippleNet.

8

PitchBookAnalystNote:CurrencyCrossroads:ACross-BorderPaymentsDeepDive

Marketdynamicsandshiftingtrends

Marketdynamicssuchasglobalization,

supplychainreshuffling,shiftingforeign

Understandingdriversofcross-borderpayments

investmentflows,increasedfinancial

inclusion,paymentinfrastructure

advancements,andAIaretransformingglobal

paymentprocesses.

Muchofthegrowthincross-borderpaymentshasbeendrivenbyB2Btransactions

andfueledbyincreasedglobaltrade,internationalbusinessexpansion,

advancementsinpaymentsinfrastructure,andgreaterdigitaladoption.Onthe

consumerside,cross-bordertransactionsaregrowingduetogreaterfinancial

inclusion,e-commerceexpansion,andimprovedtoolsforinternationalremittances.

However,cross-borderpaymentflowsarealsohighlyaffectedbyglobal

challenges,includinggeoeconomicfragmentation,supplychainrestructurings,

andcurrencyfluctuations.Weexpandonsomeofthesemarketdynamicsinthe

followingsections.

Globalizationinthedigitalage

Theglobalizationofbusinessesisaccelerating,withmorecompaniesexpanding

internationallyeachyear.Thetrendisevidentintheglobalexportsofgoodsand

services,whichreachedarecordhighof$31.3trillionin2022,accountingfor31.1%

ofglobalGDP.20,21Thisrepresentsa275-basis-pointincreasefromthepre-pandemic

levelof$24.9trillionin2019.Lookingfurtherback,theproportionofglobalexports

toGDPhassignificantlyincreasedfrom23.2%twodecadesago.22Observingannual

growthratesalsoshowsthatglobalexportshaveoutpacedglobalGDPinrecent

years.FollowingtheCOVID-19pandemic,globalexportsgrewannuallyby25.1%in

2021and11.1%in2022,whereasglobalGDPincreasedby13.9%in2021and3.8%

in2022.23

Historically,twomajorwavesofglobalizationhavetakenplace.Thefirstwave

occurredfromthemid-19thcenturyuntiltheonsetofWorldWarIandwas

drivenbyincreasedinterindustrytrade(exchangingdistinctsetsofgoods)and

GDPandexportsofgoodsandservices*

$12035%

$100

30%

$80

$60

$40

25%

20%

15%

10%

$20

5%

$00%

Exportsofgoodsandservices($T)GDP($T)

Exportsofgoodsandservicesas%ofGDP

Sources:TheWorldBank,PitchBook?Geography:Global?*AsofJune25,2024

20:“ExportsofGoodsandServices(CurrentUS$),”TheWorldBank,n.d.,accessedJuly16,2024.

21:“GDP,”TheWorldBank,n.d.accessedJuly16,2024.

22:Ibid.

23:Ibid.

9

PitchBookAnalystNote:CurrencyCrossroads:ACross-BorderPaymentsDeepDive

technologicaladvancementssuchassteamshipsandtelephones.Thesecond

wavefollowedtheendofWorldWarIIandcontinueduntilthelate20thcentury.

Thisperiodwascharacterizedbyhigherlevelsofintraindustrytrade(exchanging

similarsetsofgoods)andwasfacilitatedbyinnovationsinplanes,televisions,and

shippingcontainers.Duringthistime,thecostsofoceanfreight,passengerair

transportation,andinternationalcallssignificantlydeclined,boostingglobaltrade.

Today’sglobalizationismarkedbyadvancementsincomputers,theinternet,

andmobilephones.Thesetechnologies,alongwithinnovationsinpayment

infrastructures,havegreatlyfacilitatedinternationaltradeingoodsandservices.

Additionally,theCOVID-19pandemicaccelerateddigitaltrade,leadingtosubstantial

growthinthee-commerceindustry.Whilegrowthine-commercehasnormalized

sincethepandemic,themarketremainsamassivedriverofcross-borderpayment

flows.In2023,globale-commercesalesinretailalonewereestimatedtoreach$5.8

trillion.24Tohighlighttheindustry’sscaleanotherway,failedcross-borderpayments

canresultin$3.8billioninlostonlinesalesannuallyforUSmerchants.25

Thesurgeine-commerceplatformshasempoweredbusinessesofallsizesto

accessaglobalcustomerpool.Thistrend,combinedwiththeincreaseinremote

workfacilitatedbytheCOVID-19pandemic,haspromptedbusinessestoexpand

theirheadcountsonaglobalscale.26Theneedtofacilitateglobalpayrolls,drivenby

greaterworkforcedistributionandtheriseofnewsectorssuchasthegigeconomy,

isalsoincreasingdemandforseamlesscross-borderpayments.Webelievethe

payrollsectorwillbeameaningfuldriverofcross-borderpaymentsvolume.The

sectorismassiveonaglobalscaleandhasallowedmultipledecacornsandunicorns

toemergeinthespace,includingDeel(valuedat$12.1billion),Rippling(valuedat

$11.8billion),Gusto(valuedat$9.6billion),andRemote(valuedat$2.8billion).

Anothertrendimpactingcross-borderpaymentflowsisthereshufflingofsupply

chains.Companiesarechangingwheretheysourcematerialsandservicesin

effortstopreventpandemic-likedisruptionsandtonavigateescalatinggeopolitical

tensions.AnoticeableeffectofthishasbeentheshiftingofproductionoutofChina

andintoregionssuchasSoutheastAsia,LATAM,andtheMiddleEast.According

toBCG,inthepastfiveyears,over90%ofNorthAmericanmanufacturershave

relocatedtheirproductioneffortsfromChinatomorecost-competitivecountries

withlesssaturatedlabormarkets,suchasMexico,India,Morocco,andTurkey.27

MajorcompaniessuchasAppleandWalmartarealsodeployingthisstrategy;both

companieshaveshiftedsignificantamountsoftheirproductioneffortsfromChina

toIndiainthepastyear.28,29

Governmentpoliciesarealsoincentivizingsomesupplyshifts.Forexample,withthe

InflationReductionAct,theUSextendedtaxcreditsforelectricvehicleswith40%

oftheirbatteriessourcedfromtheUSoritsFreeTradeAgreementspartners,which

includeMexicoandafewcountriesinLATAM.

24:“RetailE?CommerceSalesWorldwideFrom2014to2027,”Statista,June2023.

25:“FailedCross?BorderPaymentsCostUSMerchantsanEstimated$3.8B,”PYMNTS,February21,2024.

26:WediscussedpayrolltechingreaterdetailinourQ42023EnterpriseFintechReport.

27:“HarnessingtheTectonicShiftsinGlobalManufacturing,”BCG,JonathanVanWyck,etal.,September21,2023.

28:“WalmartShiftstoIndiaFromChinaforCheaperImports,”NBCNewsandReuters,November29,2023.

29:“AppleDoublesIndiaiPhoneProductionto$14BillionasItShifts