The race for dominance in the cross-border payment industry is heating up as major players like Ripple, Stellar, Swift, and Cardano double down on their efforts to innovate. A recent report revealed that the industry grew by $25 trillion between 2018 and 2022, reaching a total value of over $150 trillion. This growth is almost equivalent to the entire size of the global technology industry projected for 2023. Crypto News Flash predicts that the industry will continue to expand and reach $250 trillion by 2027. This growth can be attributed to investments in trade and infrastructure projects, such as the African Continental Free Trade Area and China’s Belt and Road Initiative, which contribute to 10% of the annual growth in cross-border payments from emerging economies.
Despite the competition, Swift remains a dominant player in the industry, according to Tanja Haase, Head of Swift Go. A survey conducted with the input of 4,000 consumers and SMEs confirmed that banks are still the preferred avenue for cross-border transactions. Swift has recently made efforts to lead the industry with its Central Bank Digital Currency (CBDC) interoperability experiment. Over 30 financial institutions have participated in the experiment, and it has now reached an advanced stage with three central banks and monetary authorities, including the Hong Kong Monetary Authority and the National Bank of Kazakhstan, integrating the solution with their infrastructure for direct testing.
While Swift aims to maintain its dominance, it faces tough competition from Ripple and Stellar Lumens. Ripple recently announced a strategic partnership with global e-commerce giant Amazon to integrate its digital asset XRP into its payment operations. Experts predict that this move could drive the price of XRP to $500 by 2027. Stellar, on the other hand, offers faster and cost-effective transactions, making it a strong contender in the industry. What sets Stellar apart is its interoperability with other blockchains and traditional financial infrastructure through regulated financial institutions called anchors.
Another rising platform in the industry is Hedera, a blockchain project known for its fast settlement time and ability to accommodate 10,000 transactions per second. Transaction fees on Hedera are less than 1¢ USD and are fixed. Additionally, FedNow, an instant payment system launched by the US Federal Reserve in 2023, is gaining traction within the ecosystem. It already has the support of 35 banks and credit unions, as well as the Treasury Department’s Bureau of Fiscal Service. While participation in FedNow is optional, it is available to over 10,000 US financial institutions and is the first real-time payment system in the country.
In conclusion, the cross-border payment industry is experiencing rapid growth and intense competition among major players. With innovations and strategic partnerships, companies like Ripple, Stellar, Swift, and others are revolutionizing the industry and aiming for dominance.