As Cross-Border Payments Become Infrastructure, What Happens Next?

Cross-border payments have long carried a premium because moving money across jurisdictions has been slow, fragmented and operationally complex.

But a growing share of global commerce now relies on payment networks built to move money more quickly and predictably across borders. At the same time, central banks, commercial banks and technology providers are working on frameworks intended to reduce friction in international settlement.

Recent PYMNTS Intelligence research illustrates both the scale of cross-border activity and the demand for improvement. In “The Cross-Border Opportunity: What Global Sourcing by U.S. SMBs Means for Payment Providers,” PYMNTS Intelligence and Mastercard found that 57% of U.S. SMBs purchase goods or inputs from overseas suppliers. Among firms engaged in international sourcing, 43% identified faster payment processing and settlement as their top priority, while 27% expressed interest in changing cross-border payment providers.

The report also found that 63% of internationally active SMBs pay overseas suppliers primarily in U.S. dollars, while FinTechs received the highest customer satisfaction ratings among non-cryptocurrency providers.

Those trends arrive as the broader payments industry is examining a future in which settlement itself becomes increasingly standardized.

Settlement as Baseline

That’s evident in the likes of Project Agorá, a Bank for International Settlements effort involving major central banks and commercial banks. As PYMNTS reported earlier this year, the project has expanded testing to include the Federal Reserve Bank of New York and central banks from Europe, Japan, Korea and Mexico. The initiative is exploring how tokenized commercial bank deposits and central bank money could support more efficient cross-border settlement.

Historically, many cross-border payment innovations emerged through individual bank networks, bilateral arrangements or proprietary payment corridors. Agorá represents a different approach, one in which policymakers and central banks are helping shape common settlement frameworks from the outset.

The project remains experimental, and questions surrounding governance, regulation, interoperability and adoption remain unresolved. Still, Agorá is part of a broader movement that includes ISO 20022 adoption and instant-payment connectivity projects.

The larger issue for banks and FinTechs is what happens if faster, more predictable settlement becomes widely available.

Adam Israel, chief compliance officer at FinTech Mesh, believes the economics of moving money itself will face growing pressure.

“The basic mechanics of moving money are going to be commoditized first,” he told PYMNTS. “Historically, traditional financial institutions generated a lot of their margins from the structural friction of holding and clearing funds over multi-day settlement windows.”

If that friction declines, institutions may need to look elsewhere for differentiation.

He stated that compliance and oversight are becoming increasingly important competitive factors.

“The advantage will belong to platforms that can prove a robust, audit-ready oversight infrastructure that manages risk appetite end-to-end, rather than those just selling a faster pipe,” he said.

Yousuf Rizvi, principal at Ridgeway Financial Services, sees a similar transition underway.

“Once settlement itself becomes a utility, competitive advantage shifts to everything that surrounds the transaction,” Rizvi told PYMNTS. “Underwriting, risk scoring, compliance automation, treasury management, customer experience and embedded financial services become the differentiators.”

In Rizvi’s view, firms that relied primarily on correspondent banking spreads, remittance markups or opaque foreign exchange margins could face increasing pressure as settlement capabilities become more broadly available.

The next stage of competition may therefore focus less on payment execution and more on services that help businesses manage international operations.

Rizvi said the shift is already underway.

“When movement of money becomes a commodity, the margin moves to the work around the money,” he said. “Multi-currency liquidity optimization, real-time FX hedging, automated sanctions and AML screening, and the customer relationship layer become where institutions earn.”

That conclusion aligns with the PYMNTS Intelligence findings. SMBs are asking for speed, but they are also seeking transparency, foreign exchange capabilities, customer support and payment certainty. Those demands point toward a market where settlement increasingly functions as infrastructure while value migrates to the services built around it.

For banks and FinTechs, the implications are significant. If cross-border settlement becomes more standardized, owning a payment rail may matter less than owning the customer relationship, managing liquidity efficiently and helping businesses navigate an increasingly complex regulatory environment. In that environment, the winners may not be the institutions that move money fastest. They may be the ones that make global commerce easier to manage once the payment itself becomes routine.