Page 10 - GS170102

News

Amazon, eBay, Flipkart, and Rakuten," MGI researchers end. The certainty of funds is also critical to the receiving
wrote. "Approximately 12 percent of the global goods trade institution – assurance that the amount owed is the amount
is conducted via international e-commerce." received, along with the data that goes with it to reconcile
their own ledgers."
MGI analysts expect digital information flows to grow an
additional nine times over the next five years in response Enhanced services, security
to increasing movement of goods, services, finance and Cross-border transactions are typically complex and
people. The global economy has a digital component for challenging for merchants, and consumers and businesses
every type of cross-border transaction, they stated. must take steps to reduce friction while making payments
New global citizens safe, convenient and cost-effective, Massaro stated.
Increased levels of fraud reported in 2016 prompted many
MGI research additionally found private individuals use institutions to protect their customers by restricting access
connected devices to manage personal and professional to trusted service providers and educating customers to
networks. "Some 900 million people have international conduct transactions solely through these channels.
connections on social media, and 360 million take part
in cross-border e-commerce," the authors wrote. "Digital "Both payors and payees are looking for protection against
platforms for both traditional employment and freelance fraud and assurances of compliance with any international
assignments are beginning to create a more global labor regulations," Massaro added. "And with governments'
market." increased focus on cutting off financing sources to
potential terrorists, any entity processing large, cross-
Hyper-connected global citizens represent an important border payments will need to have secure systems in place
new demographic segment in financial services, noted to verify sources and recipients, ensure strict compliance
Mike Massaro, Chief Executive Officer at Flywire, a cross- with anti-money-laundering laws and provide detailed
border payment service provider. transaction reporting."

"This fast-growing segment does not consider borders in The increase in high-ticket transactions across disparate
terms of lifestyle, access or travel and is spending more than cultures, languages and time zones will place additional
ever on goods and services outside of their home countries – pressure on business owners to provide continuous support
on education for their children, medical care for themselves to their international clientele, Massaro predicted.
and their family members, real estate, luxury items and
other offerings that bring diversity and culture to their life "Schools, hospitals, tax agencies and others are not
experience," he said. "We'll see this demographic continue necessarily equipped to be in that business," he said.
to grow in 2017 and beyond and flex their spending power "Any entity accepting large, cross-border payments in any
in new ways." volume will need to be able to provide ancillary support
services related to those payments – in-house or via
Bridging cross-border gaps qualified third parties – and 24/7 customer support will

MGI's analysis attributes a 10.1 percent increase in global become a minimum requirement."
gross domestic product to cross-border data flows that
expose economies to ideas, research and talent, a value Double-digit growth in
worth $7.8 trillion in 2014, researchers stated. The MGI
Connectedness Index indicated it ranked 139 countries
outflows of goods, services, finance, people, and data." 2016 holiday spend
on their use of digital channels to manage "inflows and

Singapore received the highest ranking, followed by the
Netherlands, the United States and Germany. ncoming reports on the post-holiday season show
double-digit growth in all areas of retail, from mom-
The rise of cross-border payments has broadened the and-pop merchants to the world's largest retail
international marketplace and made it easier for consumers I brands. Analysts attribute consumer confidence
to pay in local currencies, using familiar options such as among key demographic groups and omnichannel market-
bank transfers, online banking, credit and debit cards, ing campaigns as key drivers of increased holiday spend.
payments analysts stated. This has placed additional Consumers are increasingly using technology to augment,
pressure on international payment service providers to but not replace, the brick-and-mortar shopping experience,
adopt digital payment schemes. experts noted.

"Payment speed and convenience aren't the only drivers "Consumer confidence continued to improve into December,
for global citizens," Massaro said. "Their top priority is and we saw this optimism reflected in the holiday spending
ensuring the payment gets to the institution on the other numbers," said Tom McGee, President and Chief Executive

10