Web3 Payments: A New Option for Consumers in Cross-Border Payments

Consumer cross-border payment habits are changing. People are constantly trying out new payment methods but are still looking for better options. As the CEO of VISA said, "The changes in payment methods over the past 5 years are greater than in the past 50 years."

In today's world where blockchain technology and digital currencies are continuously developing, the transformation of payment methods is actually a change in accounting methods — the blockchain as a public and transparent global ledger. The way humans have recorded accounts has only changed three times over thousands of years, and each time it has profoundly shaped economic forms and social structures.

• The single-entry bookkeeping of the Sumerian period facilitated early trade and the formation of states.
• Double-entry bookkeeping drove the commercial revolution and the development of banking during the Renaissance.
• The distributed ledger brought by Bitcoin is promoting the rise of decentralized finance and digital currencies.

This transformation will not happen overnight; it is continuously evolving. It has currently facilitated Web3 payments based on blockchain and digital currencies, and this new payment method is gradually penetrating all aspects of real society.

This article will use VISA's recent consumer cross-border payment survey report and market cases to explore the solutions provided by Web3 payments for the current main scenarios of consumer cross-border payments, and finally look forward to the future development direction of Web3 payments.

1. The Growing Cross-Border Payment Market

Driven by the surge in cross-border e-commerce, cross-border travel, and cross-border remittances, the cross-border payment market is experiencing explosive growth. Consumers are making cross-border payments more frequently than ever before, with the Bank of England predicting that related payments will reach $250 trillion by 2027.

Consumers around the world are embracing cross-border payments, with spending on cross-border transactions at an all-time high, but what’s truly interesting is the frequency. 30% shop cross-border through e-commerce weekly, 45% send and receive remittances monthly, and 66% travel abroad annually.

People usually develop habits that make routine decision-making easier and more efficient, but this habit has not yet formed in the field of cross-border payments. On average, they use 4 out of 7 different payment methods, and only 16% of consumers consistently use their default payment method.

Currently, there seems to be no payment method that can fully meet consumers' needs for cross-border payments, although nearly 80% of consumers are still using traditional banks for cross-border payments. However, one thing is very clear to consumers: they need a safe and trustworthy cross-border payment provider.

Between June 2023 and June 2024, a total of 771 million people engaged in cross-border transactions. Research by VISA indicates that this growth is primarily driven by three categories of transactions: e-commerce, travel, and remittances.

1.1 Main Scenarios and Methods

A. Cross-border e-commerce

80% of consumers choose to shop through cross-border e-commerce, with 67% of people making cross-border purchases every month. It is predicted that by 2026, the global B2C e-commerce market size will exceed $8.3 trillion. Nowadays, finding desired products globally is no longer difficult, but the convenience of payment experiences still needs improvement. Consumers are eager for simple, easy-to-use, and secure payment methods.

B. Cross-border Travel

Two out of every three people have cross-border travel experiences, with 52% of them traveling more than once a year. According to the 2024 travel trends, the main purpose of travel for people is to relax and relieve stress. Therefore, the last thing travelers want to encounter is the pressure or worries while shopping. They need a simple and secure payment method.

C. Cross-border Remittance

Four out of ten people use cross-border remittance services, with 45% of them making remittance transactions every month. Despite the complex geopolitical situation, the number of international migrants continues to grow, and it is expected that by 2028, the cross-border remittance market will exceed 1 trillion dollars. Consumers urgently need a safe and reliable way to make cross-border remittances.

Among the following seven cross-border payment methods, the average consumer will use four of them.

1. Electronic Payment Methods
2. Credit Card or Debit Card
3. P2P Transfer
4. Bank Transfer
5. Online Transfer
6. Prepaid Travel Checks/Cards
7. Cash

1.2 Why is now the right time to offer cross-border services to consumers?

The cross-border trading market is vast and continuously growing. This is a critical stage in the development of cross-border trade. More and more consumers are frequently making cross-border payments, but traditionally, these transactions are often slow, costly, and lack transparency. However, all of this can change completely.

Consumers are currently using various payment methods. Each consumer is trying out different payment solutions, actively seeking the one that suits them best. However, they have not yet found the ideal solution. They desire more options and hope for guidance to help them make informed decisions. As consumers begin to form habits that may last a lifetime, now is a critical moment to influence their choices.

Consumers need stable payment habits and reliable partners. As banks and fintech companies realize the potential to become consumers' preferred cross-border payment method, market competition will intensify. This is not only an opportunity to attract new customers through new services but also a chance to retain existing customers in cross-border consumption through one-stop solutions. However, there is also the risk of other competitors getting ahead.

The foundation of trust cannot be ignored. In cross-border transactions, trust, security, and reliability are crucial, especially when the transaction amounts are often large. Consumers are very sensitive to these factors and expect banks and fintech companies to provide a secure and reliable payment environment. Winning customers' trust is key to establishing long-term partnerships.

2. Main Scenarios and Models of Consumer Cross-Border Payments

The following will delve into the scenario processes of cross-border e-commerce, cross-border travel, and cross-border remittance payment transactions, as well as the core issues encountered in cross-border payments.

2.1 Cross-border E-commerce

In the past year, approximately 589 million people worldwide participated in cross-border e-commerce transactions. Among them, 72% of transactions involved purchasing physical goods through mainstream online retailers, while 44% involved the purchase of digital products. Despite the rise of social media markets, only 30% of consumers shop through these platforms, which may be related to concerns about data breaches.

In terms of cross-border shopping payment methods, consumers mostly choose credit cards, debit cards, or digital app payment services. However, financial institutions may be surprised to find that only 51% of consumers use credit or debit cards. This indicates that there is still market space for other payment methods, such as 36% of consumers opting for digital app payment services, and some consumers using wire transfers or P2P services.

However, there are still significant differences in consumption habits among different countries:

Germany: Consumers are least willing to use credit or debit cards, with only 32%, while they prefer digital APP payment services at 49% and bank transfers or wire transfers at 35%. This may be because consumers value the security and ease of use of payments more.

Philippines: Consumers' Preferred Digital APP Payment Method (49%), which may be related to the fact that 48.2% of local consumers cannot access traditional banking systems.

The payment scenarios for cross-border e-commerce are more likely to involve consumers in their own country making purchases through payment gateways of overseas e-commerce platforms. Payment gateways will inevitably link various payment methods, such as preferred credit or debit cards ( through card organization networks ), such as Paypal, Apple Pay ( through digital app payments ), and bank transfers ( through the bank SWIFT network ), etc.

( 2.2 Cross-border travel

Among the consumers surveyed, two-thirds had traveled abroad in the past year, with 62% stating that they used credit or debit cards to book their trips, making it the most popular payment method. This preference is reflected not only in booking travel but also in their actual spending abroad. Most respondents used the same payment method during their travels as when they booked their trips. This may be because credit cards are widely accepted and offer conveniences such as instant currency conversion and fraud protection.

Despite the continuous emergence of factors such as geopolitical issues, cross-border travel has still become a norm, especially in Singapore )86%( and the UAE )84%(, where consumers from these two countries have the highest proportion of traveling abroad. In the 13 markets surveyed, nearly 50% of respondents from each country had traveled abroad in the past year.

When it comes to travel payment methods, most consumers choose credit cards or debit cards to book trips or pay for travel expenses. However, a small number of consumers also use other payment methods such as bank transfers, wire transfers, or digital app payment services.

Canadian travelers especially prefer credit or debit cards, with the proportion of using other payment methods being less than 10% compared to other markets. This may be because Canadians place more importance on credit card reward systems; according to survey reports, consumers value reward points more than transaction speed.

In contrast, Brazilian visitors are the least likely to use credit cards, with a probability of less than 50%, which may be related to the historically high credit card interest rates in Brazil, and is also influenced by the widespread adoption of PIX, the instant payment platform created by the Central Bank of Brazil.

The payment scenarios will more likely be: consumers using their domestic debit or credit cards to make purchases at overseas merchants, or using digital app payment platforms to scan codes.

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( 2.3 Cross-Border Remittance

In the past 12 months, 40% of respondents have sent or received remittances, with bank transfers or wire transfers being the most common payment methods. In countries with a large immigrant workforce, such as the UAE and the Philippines, the remittance send-and-receive ratio is the highest at 87% and 74%, respectively, which is not surprising. Remittances are an important source of funding for millions of workers and families worldwide, and senders hope to obtain the most cost-effective payment services for each transaction.

In 2023, the total remittances flowing to low- and middle-income countries increased by 3.8%, reaching $669 billion. In the Asia-Pacific region, China, India, and Singapore are markets with frequent remittance activities. A significant trend is that digital app payments are increasingly favored by remitters due to their security and ease of use, gradually becoming the primary method for sending and receiving remittances. Compared to traditional remittance methods, digital app payments are considered to have higher security.

Compared to digital app payment methods, there are significant differences in cross-border remittance payment methods. Although bank transfers or wire transfers have longer processing times and often higher costs, they remain the most commonly used remittance methods.

Unlike other markets, the proportion of users in the U.S. using cross-border remittances is the highest at 35%. This may be due to the convenience and ease of use of debit card payment methods. In the UAE, consumers use banks or wire transfers for cross-border remittances at a rate of 53%. Although consumers have also tried other payment methods, banks or wire transfers are the most reliable ways for cross-border remittances.

The process of cross-border remittances through the banking network is as follows: If there are settlement accounts between major banks in developed countries, then the transaction process will be relatively simple. However, not every bank has a direct relationship with each other, so sometimes