One of the themes in the 2020 Outlook for commercial & enterprise payments is “globalization”, with subtexts around digital everything and cross-border payments. Another theme is “collaboration” that speaks to the era of open banking, which in some markets is mandated and in others is becoming a requirement.
Financial services companies will need to adapt. In this article, which is posted at FXcompared, the writer provides an overview of the Mastercard earnings call for Q4 and FY 2019. One of the highlighter achievements cited by Mastercard is the increase in cross-border payments activity, which is in part driven by open banking realities.
According to the article, CEO Ajay Banga offered some commentary along these lines:
“PayPal will utilize Mastercard Send in 10 new markets across Asia Pacific..to enable users to transfer funds from their PayPal wallets to their eligible accounts”, he said…“And also leveraging our capabilities to help facilitate more efficient cross border payments”, he added…He also commented on relevant international money transfer issues, including that of open banking…“We see open banking is an important global trend and a significant opportunity and believe that our leadership in data privacy as well as our scale in real time and cross-border payments are very good…key to optimizing open banking solutions for banks, for fintechs, for merchants and for consumers globally”, he said.
We have also been advising on and observing the strategic shift in recent years for card networks to better utilize their rails for B2B and B2C types of use cases, an ongoing key growth opportunity as a global digital payments transition continues.
There are certainly robust domestic B2B flows to capture as markets move away from paper. But when one considers the $30 trillion+ in international B2B funds movement, it also seems fairly logical for cards to capture a fair portion of that given the existing global networks. So, the concentration of resources via network buildouts, acquisitions, and collaborations seem to be paying off.
He emphasized the way in which cross border payments are expected to take priority over the course of 2020.“…our corporate purchasing cards, our fleet cards, our SME cards, our virtual account numbers, our cross-border travel payment systems, those are all relatively well developed and are well factored into the way we think about 2020”, he said…Elsewhere in the earnings call, MasterCard said that it had seen rises in other areas of business…It pointed in particular to switched transactions, which had risen by almost a fifth to a figure of nearly 24bn.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
