According to a recent PYMNTS report which examines the latest cross-border retail payments developments, cross-border eCommerce sales are expected to continue soaring next year as COVID-19 lockdowns and the subsequent acceleration of digitization have increased consumers’ comfort level with online overseas transactions.
Produced in collaboration with mobile wallet payment provider Citcon, the report revealed that cross-border eCommerce sales are anticipated to hit $1.2 trillion in 2022, with European countries expected to account for almost 28.3% ($340 billion) of the anticipated total sales in cross-border spending.
Read the PYMNTS report: Cross-Border Retail Payments Tracker
To support this prediction, the report referenced findings from a recent survey that showed that 30% of consumers in Belgium, Germany and the Netherlands made more online purchases from international retailers during the pandemic than they previously did.
See also: Global Merchants Use Payments to Make Online Shoppers Feel at Home
For online retailers, this cross-border success holds great promise, and has sparked their interest in direct-to-consumer (D2C) sales as a way of expanding their businesses into international markets. And given that foreign transactions generated positive returns during this period of financial uncertainty, retailers can expect cross-border sales to remain a key part of their future growth strategies.
But as cross-border businesses gain momentum in eCommerce, retailers will have to consider foreign exchange (FX) rates which are a major pain point for business owners who want to expand their operations overseas, the report noted.
Learn more: eCommerce’s Trillion-Dollar Year Is (Easily) In Sight
Larger organizations have an upper hand in this situation as they often have the tools and resources to guard against the constantly fluctuating exchange rates and to mitigate FX risks that impact cross-border revenue.
For small and medium-sized businesses (SMBs) with fewer resources, however, it is a more difficult undertaking, causing many small retailers to hire external partners to help them navigate these challenges.
Cryptocurrency is a possible solution to the problem, the report stated, as its value remains the same across countries and its benefits for cross-border payments, including lower costs and the ability to clear in minutes or even seconds, is more attractive to fiat transfers that can take days to clear.
As a sign of its growing potential, analysts predict that the digital currency will make up a significant portion of cross-border payments in the very near future, with nearly 45% of consumers around the world using it for cross-border payments within the next two years, up from the less than 10% of global customers who currently do so, the report noted.
On the downside, cryptocurrency is not yet a mainstream method, and the lack of regulation and volatile valuations associated with virtual currencies mean that it will take a while before more firms embrace it as a viable payment method.
Related: Western Union Expands Mastercard Partnership to Advance Global Services
In the meantime, companies continue to seek ways to boost cross-border payments adoption in regions like Europe. Last month, Western Union and Mastercard announced that they were expanding their 10-year digital partnership to broaden global customers’ cross-border payment options.
As PYMNTS reported, the expanded collaboration will enable Western Union customers in 16 European markets to leverage Mastercard Send to send money transfers in near real-time directly to their receivers’ Mastercard debit cards, accelerating and simplifying the process.
Receiving destinations include Croatia, Hungary, Kosovo, Romania, Russia, Serbia, Slovakia and Turkey, with the firms planning to add more countries on both sending and receiving sides next year.
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