Mizuho: Cross-Border Mobile Payments Mean Results

May 25, 2018         By: Steven Anderson

One great point about mobile payments that’s especially driving the concept in some places is cross-border functionality. The ability to pay for goods and services located in some other country with a payments platform can be especially useful in places like Europe and Africa, places where there are several countries contained in one land mass. A new report from Mizuho Payments notes that cross-border means big business when it comes to payments.

The Mizuho report noted that cross-border is driving around 40 percent of total net revenue for the industry on average, which leads to it not only being higher than expected, but also underappreciated in general.

One of the biggest causes of this is that some forms of cross-border operation, particularly cash withdrawals from ATMs, don’t benefit from incentive programs. That means cash pulled out doesn’t come out at a discount, and that’s more revenue to the ATM provider’s good. Cross-border ATM withdrawals account for about $1 billion in fees annually for card networks, which makes it a point to consider. Cross-border pricing also contributes somewhat to revenue, based on prices charged to issuers and acquirers by card networks.

There are even some less-considered factors like cash volumes; Visa and Mastercard, for example, claimed cash volumes of around $4.3 trillion combined back in 2017. This includes ATM withdrawals on the Cirrus and Visa Plus networks, and since some of these are cross-border, that means these withdrawals would be priced at higher rates. If just one percent of that total were cross-border, it would account for nearly a billion dollars—$926 million—in revenue.

Cross-border business can be a very big deal. We’ve already seen how some mobile payments networks are tackling the cross-border issue, and one of the biggest reasons to get behind cryptocurrency is the cross-border concept. With cross-border issues representing a lot of red tape and legalese in many cases, anything that can cut through the static and provide access to the ability to buy and sell goods wherever they’re located is likely welcome.

To see that cross-border is already contributing to bottom lines in a very big way is news that shouldn’t be surprising, but somehow is due to the sheer size of that contribution. The growth of mobile and cryptocurrency should only help ramp those figures up.