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

Consumer cross-border payment habits are changing. People are trying various 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 have been greater than in the past 50 years."

In today's continuously evolving landscape of blockchain technology and digital currencies, the change in payment methods is driven by a transformation in accounting methods - the blockchain, a publicly transparent global ledger. The way humans have kept accounts has changed only three times in thousands of years, and each change 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 facilitated the emergence of banks and multinational corporations, establishing commercial credit.
• The distributed ledger technology driven by Bitcoin in 2009 paved the way for decentralized finance, changes in trust mechanisms, and the rise of digital currencies.

This transformation is continuously evolving, leading to Web3 payments based on blockchain and digital currencies, which are penetrating various aspects of society.

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

1. The Growing Cross-Border Payment Market

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

30% of people shop overseas through cross-border e-commerce weekly, 45% send and receive remittances monthly, and 66% travel abroad annually. On average, they use 4 out of 7 different payment methods, and only 16% of consumers consistently use their default payment method.

It seems that no payment method can fully meet consumers' needs for cross-border payments, although nearly 80% of consumers still use traditional banks for cross-border payments. However, consumers are very clear that they need a secure and trustworthy cross-border payment provider.

From June 2023 to June 2024, a total of 771 million people engaged in cross-border transactions, mainly driven by three categories of transactions: e-commerce, tourism, and remittances.

1.1 Main Scenarios and Methods

A. Cross-border E-commerce

Eighty percent of consumers choose to shop through cross-border e-commerce, with 67% of them making cross-border purchases every month. By 2026, the global B2C e-commerce market is expected to exceed $8.3 trillion. Consumers are eager for payment methods that are simple, easy to use, and secure.

B. Cross-border travel

Two out of every three people have cross-border travel experiences, and 52% of them travel more than once a year. Travelers need simple and secure payment methods to fully enjoy their trips.

C. Cross-border Remittance

Four out of every ten people use cross-border remittance services, with 45% of them making remittance transactions every month. It is expected that by 2028, the cross-border remittance market will exceed 1 trillion dollars. Consumers have an urgent need for safe and reliable cross-border remittance methods.

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 Now is the right time to provide cross-border services to consumers.

The cross-border trading market is vast and constantly growing. 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 a variety of payment methods. Each consumer is trying different payment solutions, actively seeking the one that best suits them. However, they have not yet found the ideal solution. They crave more choices and hope to receive guidance to help them make informed decisions.

Consumers need stable payment habits and reliable partners. As banks and fintech companies realize the potential to become the preferred cross-border payment method for consumers, market competition will intensify. This is not only an opportunity to attract new customers through new services but also an opportunity to retain existing customers for cross-border consumption through one-stop solutions.

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.

2. Main Scenarios and Models of Cross-Border Payments for Consumers

2.1 Cross-border e-commerce

In the past year, approximately 589 million people participated in cross-border e-commerce transactions worldwide. Among them, 72% of the transactions were for physical goods purchased through mainstream online retailers like Amazon and eBay, while 44% of the transactions were for 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 payment methods for cross-border shopping, consumers mostly choose credit cards, debit cards, or digital app payment services such as Paypal, Apple Pay(. However, only 51% of consumers use credit or debit cards. 36% of consumers opt for digital app payment services, while some consumers use wire transfers or P2P services.

There are significant differences in consumption habits across different countries:

• Germany: Consumers are least willing to use credit or debit cards ), with only 32% ( preferring digital app payment services ) at 49% ( and bank transfers or wire transfers ) at 35% (.

• 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 will more often involve consumers making purchases in their home country through the payment gateways of overseas e-commerce platforms. Payment gateways will inevitably connect to 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 ) via the bank SWIFT network (, etc.

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) 2.2 Cross-border Travel

Among the consumers surveyed, two-thirds traveled abroad in the past year, with 62% indicating that they used credit or debit cards to book their trips, making it the most popular payment method. Most respondents used the same payment method during their travels as they did when booking their trips.

Despite the prominent geopolitical factors at present, cross-border travel has still become a norm, especially in Singapore ###86%( and the UAE )84%(, where the proportion of consumers traveling abroad is the highest. In the 13 markets surveyed, nearly 50% of respondents from each country had traveled abroad in the past year.

In terms of travel payment methods, most consumers prefer to use credit 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 particularly prefer credit cards or debit cards, with less than 10% using other payment methods.

• In comparison, Brazilian visitors have the lowest likelihood of using credit cards, below 50%, which may be related to Brazil's historically high credit card interest rates, and is also influenced by the widespread adoption of PIX, an instant payment platform created by the Central Bank of Brazil.

Payment scenarios will more likely be: consumers using their domestic debit or credit cards to make purchases at foreign merchants offline, or by scanning codes through digital APP payment platforms.

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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 highest at 87% and 74%, respectively.

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

Unlike other markets, the proportion of users in the United States 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%.

If major banks in developed countries have settlement accounts with each other, then the transaction process will be relatively simple. However, there is not always a direct relationship between every bank, so sometimes they need to use an intermediary - "correspondent bank" to conduct transactions. If there is no direct relationship between Bank A and Bank B, the correspondent bank will provide accounts for them.

For small currencies/remittance troubled countries, the agent model ( where intermediaries earn the price difference ) will greatly erode their profits and impose a huge burden on consumers. According to statistics from international banks, the average cost of remittances globally accounts for 6.62% of the remittance amount.

Research shows that consumers expect cross-border payments to be as convenient and smooth as daily payments, and financial institutions must strive to meet this demand from customers. Customers want cross-border payments to be fast, transparent, and efficient, with instant arrival, avoiding days of settlement waiting, especially for small transactions.

3. Characteristics and Pain Points of Cross-Border Payments

Cross-border payments are becoming increasingly common and frequent.

Cross-border payments are very common among many consumers in various regions. However, it may surprise many that the frequency of these cross-border purchasing behaviors is quite high. Despite differences between different types of products and various markets, overall, a significant portion of consumers make cross-border payments monthly, weekly, or even more frequently.

Most digital natives - Generation Z (84%) and Millennials (83%) have engaged in cross-border transactions in the past month, which is quite a significant number. Among Baby Boomers and older groups, 68% reported having made cross-border transactions in the past month, catching up - in addition to purchasing goods and services, they may also be remitting money to family abroad, paying tuition, or buying property.

( The payment method is not fixed, and habits have not yet been formed.

Cross-border payments are becoming more common and frequent, making it crucial to understand how they handle these transactions. Research shows that consumers currently do not have a clear preference for payment methods in cross-border consumption and services. This is precisely the window of opportunity for fintech companies in cross-border payment services.

Currently, consumers still use a variety of different applications and payment methods for cross-border transactions. In terms of cross-border e-commerce and cross-border travel, over 50%