By Matt DeLauro, Chief Revenue Officer, SEON
We have long aspired to a world of borderless business. In 2024, it’s fair to say we’re almost there. In today’s world, a click of a mouse can move money across the globe instantly. What’s more, it seems inevitable that this interconnectedness will only intensify, especially as more developing countries mature economically.
Cross-border payments have played a huge role in this shift. Thanks to advancements in paytech, cross-border payments have been greatly simplified in recent times. It’s a far cry from just a few years ago, where this form of payment was considerably more complicated, costly, and prone to failure.
However, as cross-border payments become more integral to global business, they’re also bumping into trouble, especially with fraudsters lurking around. It’s now important to find ways to improve the security of such transactions, while not overburdening them with unnecessary friction that ultimately slows them down.
Getting to the bottom of that problem is something we’re working on at SEON, and as such, we have spent the last few years paying very close attention to the issue. Over time, it has become obvious that there are three big trends shaping the world of cross-border payments right now, which we will explore here:
Cross-border payments are essential but remain vulnerable.
Key Stats:
● The value of cross-border payments is estimated to increase to over $250 trillion by 2027 [BIS 2023].
● Cross-border payment flows increased by 13% in a single year in 2022 [McKinsey 2023].
● Cross-border payments accounted for 63% of card fraud in Europe in 2021, despite only representing 11% of total card payment transactions [ECB 2023].
The significance of cross-border payments in facilitating global commerce cannot be overstated. The field is expected to continue growing by five per cent annually until 2027. As mentioned, greater economic interconnectedness is underpinning this shift, along with previously unbanked individuals gaining access to modern financial tools.
As well as becoming more popular, the field of cross-border payments has also evolved. The rise of real-time payment technologies is causing great excitement. Such innovations, however, come with their own set of complexities, necessitating robust tech solutions to maintain effectiveness and security.
This is essential, as cross-border payments are disproportionately targeted by fraudsters who are attracted to this form of transaction on account of their perceived vulnerabilities. What’s more, scammers also feel more confident absconding away from cross-border payment fraud as they are often a great distance away from the victim.
Enhancing transparency and security remains key.
Key Stats:
● Security and transparency remain the two most important considerations for small businesses and consumers when choosing cross-border payment services [Swift 2023].
● Only 24% of consumers and 15% of businesses expect their cross-border payments to be instant [Swift 2023].
● Fraud ranks as the top concern for 41% of small business owners regarding cross-border payments [Mastercard 2023].
Many businesses rely on cross-border payments to survive, but that doesn’t mean they trust them. Unfortunately, upholding confidence in the process can be far from straightforward. Fraudsters have honed their skills in targeting businesses and customers here, so more security is needed to help them.
Fraud routinely ranks as a core concern around cross-border payments for customers and businesses. For the best chance of success, companies must develop secure and robust cross-border payment strategies, while ensuring the services they choose still enable transactions to run smoothly and without delay.
Historically, traditional risk technologies have been expensive to develop, slow to implement, and complex to manage. Thankfully, that is now beginning to change, with new solutions available that allow cross-border payments to happen seamlessly and securely. By embracing new tools, businesses with global ambitions can still thrive.
Advances in fraud prevention are ready to help.
Key Stats:
● 65% percent of organizations were victims of either attempted or actual fraud activity in 2022 [J.P. Morgan 2023].
● 65% percent of financial institutions believe solutions that leverage AI can effectively combat fraud challenges [Mastercard 2023].
● SEON’s fraud prevention solution helped innovative fintech, Felix Pago to improve detection of multi-accounting users by 100%.
Fortunately, advancements in AI have opened new avenues to address these challenges. Through advanced data enrichment and the power of machine learning, solutions like SEON can mass interpret large volumes of data to find the tell-tale signs of fraud that humans might miss. Better still, systems of this nature can elevate fraud prevention performance in a matter of seconds, not hours.
Whether it’s leveraging behavioural analysis techniques to spot anomalies in user behaviours that indicate account takeovers, or utilising transaction monitoring to spot any unusual transfers of funds, solutions like SEON are at the forefront of the fight against all forms of online fraud and financial crime, including that in payments.
Embracing Change, Building Trust
The absence of effective fraud prevention solutions not only compromises the integrity of cross-border payments but also risks a decline in their usage, potentially impacting businesses reliant on the international marketplace. SEON’s solution can provide protection against risky transactions in seconds, mitigating the threat of fraud.
If action isn’t taken and concerns around the security of cross-border payments continue to propagate then the problem will only be exacerbated. The future of cross-border payments lies in our ability to embrace these changes, ensuring that as the world becomes more interconnected, our financial transactions remain secure, efficient, and trustworthy. Without maintaining this trust, the entire system risks being compromised, so adoption is crucial.
For more information about SEON, please visit: https://seon.io/
See Also:
Back to School Fraud is Anything but Uniform | Disruption Banking
Are Fraudsters Ready to Cash in on the Digital Euro? | Disruption Banking
