Cross-Border Payments for Digital Native Economies

6 Treasury and Trade Solutions The beneficiary is king With higher payment volumes, both e-commerce and payment service providers are often exposed to a higher volume of inquiries from beneficiaries asking about expected payment delivery times and payment amounts. These inquiries are often higher in volume when paying individual beneficiaries or small businesses as day- to-day cash flow can be extremely fragile, so knowing when funds will be arriving is important. Feedback from our digital native clients is that managing such inquiries to a good standard is critical for maintaining a high level of service and keeping suppliers satisfied, but this is often very time consuming and costly. For this reason, Citi has developed a beneficiary payment tracking tool for their digital native clients, who in turn can enable their beneficiaries (or their customers’ beneficiaries) with access to a real-time self-service experience. “Citi’s investment in alternative payment methods, from Cross-Border Instant Payments to paying into digital wallets or enabling seamless payments to China, is about providing our clients and their suppliers with more choice and convenience. But this is only one half of improving the beneficiaries’ experience. The other half is achieved by providing the beneficiary with the ability to have easy and real-time access to the payment status, where they can see when the payment is arriving and how much funds will arrive. Not only does this enhance the beneficiary experience, but this enables our clients to reduce their operating costs,” says Agarwal. The wallet is dead, long live the wallet The rise of digital wallets is one of the most material shifts in the payments landscape over the last five years. China continues to lead the Asia-Pacific region in digital payment methods. Led by Alipay and WeChat Pay, digital wallets account for over 70% of e-commerce sales in China. The rest of the Asia-Pacific region is rapidly catching up, with e-commerce purchases already surpassing 50%. Across Europe, the UK remains a leader in e-commerce, with digital wallets (and debit cards) the most-preferred method for online shopping by consumers. While in the United States, the use of digital wallets is on the rise and is expected to be the preferred payment method in the coming years. Across both e-commerce and payment service providers, having access to pay into digital wallets is important, offering more choice and unlocking access to near instant and full value payment options, with 24/7 availability. The recent COVID-19 pandemic has also highlighted the importance of such a solution, where it is possible to get urgent funds to beneficiaries, without having their full bank account information. “There is a growing preference from digital economy suppliers to be paid directly into digital wallets rather than via traditional bank accounts,” says Agarwal. “This is especially relevant when paying to freelancers, app developers and influencers. The trend is largely driven by the fact that many people in these roles are millennials, which are more enthusiastic adopters of digital wallets. Our recent launch of cross-border payments to digital wallets in Kenya, Pakistan and our ability to pay directly into PayPal wallets is an important development to meet the needs of our digital native clients.” Across Europe, the UK remains a leader in e-commerce, with digital wallets (and debit cards) the most-preferred method for online shopping by consumers. While in the United States, the use of digital wallets is on the rise and is expected to be the preferred payment method in the coming years.