Digital wallets and cross-border payments: Opening the door to digital and financial inclusion
- Digital wallets are making cross-border transactions easier and more cost-effective, especially for economically vulnerable communities, with a projected $800 billion in cross-border payments this year.
- Collaborations like Visa's with Thunes and TerraPay are expanding digital wallet reach, connecting users across multiple regions, and promoting financial inclusion.
Around the world wallets help users store funds, shop, and keep track of their spending from their mobile devices. Their mobile-first design and architecture make them convenient to use with multiple services on the same app, like person-to-person (P2P) payments, card provisioning, merchant payments, food delivery, and other financial services. They also typically have friendly user experience and, in some markets, digital wallets are the most accessible financial tool for customers.
Because many digital wallets don’t require an underlying bank account, they’re particularly favored by unbanked and underbanked populations that embrace digital wallets and can serve as a steppingstone to future financial products. It’s estimated that more than 60 percent of the global population will use digital wallets by 2026, according to a study from Juniper Research.
Cross-border payments are easier with digital wallets
Visa Direct provides simple cross border solutions with access to more than 3.5 billion card credentials to send a receive money as well as 2 billion bank accounts, but one of the most popular emerging use cases for digital wallets is cross-border payments. Cross-border payments are expected to surpass $800 billion this year, according to the World Bank. Connected to this growth, digital cross-border payments powered by card credentials or simply by wallet credentials are increasingly transparent on their costs, pushing down the total fees of international payments paid by some of the most economically vulnerable communities in the world.
As demographics continue to shift, cross-border payments to and from digital wallets are becoming more important, making it easier, safer, and convenient for migrants and immigrants to access financial services.
“As one of the fastest growing financial instruments for both individuals and businesses, digital wallets provide consumers across the globe with access to fast, secure and convenient tools to send and receive funds – regardless of if they have a card linked to the wallet or a bank account,” said Ruben Salazar Genovez, global head of Visa Direct at Visa. Visa Direct is a global money movement network for end users, businesses, and clients across the globe.
Visa and Thunes add more than 1.5 billion new endpoints to Visa Direct
Partnerships play a key role connecting digital wallets globally. As an example, Visa partnered with Thunes, a cross-border payments infrastructure provider that enables users to send and receive money internationally to 79 digital wallet providers. Connecting Thunes’ B2B payments platform to Visa Direct adds a send-to-wallet capability to the wallet providers already integrated with Thunes.
The partnership enables Visa Direct to reach digital wallet endpoints across 45 countries and territories, bringing Visa Direct’s total reach to nearly 7 billion endpoints capabilities, including more than 3 billion cards, over 2 billion accounts and 1.5 billion digital wallets across more than 190 geographies.
Now financial institutions, governments, fintechs, and money transfer operators can expand financial access for consumers and small businesses in markets across Africa, Asia, Latin America, Central & Eastern Europe and the Middle East, where wallets are a popular payment method.
“With the rapid increase in digital commerce, it’s critical that the availability and accessibility of financial tools evolve in tandem. At Visa, we’re proud to help merchants, fintech clients, corporate partners and individuals alike move money around the world, and at scale, enabling them to participate in the global economy,” said Salazar.
Additionally, wallets are a convenient alternative to traditional payment methods and an on-ramp to financial services, especially for those consumers who lack experience with and access to traditional financial products.
Visa backs TerraPay with strategic investment and integration
Visa is collaborating with TerraPay, a global cross-border payments network that offers instant money transfers services to financial institutions and large corporates in Asia-Pacific, CEMEA, and LAC.
The partnership leverages TerraPay’s reach into digital wallets with connections to 86 wallets in 44 markets that reach over 2 billion individuals and small businesses.
Partnerships like the one with TerraPay give Visa additional reach to wallets for Visa Direct. It also gives TerraPay access to cards, tokens and other value-added services to enrich transactions. TerraPay will also use Visa’s card and account network for select corridors.
Visa made strategic investments in both Thunes and TerraPay to support market expansion and enable further innovation in the space.
Visa and Paysend strengthen their strategic partnership
In another example of strategic collaboration focusing on person-to-person payments, Visa is working with the UK fintech innovator Paysend to enable Paysend customers around the world to send money to eligible Visa cards and accounts in real-time across 170 countries and territories. The partnership aims to revolutionize international money transfers through Visa Direct, Visa’s real-time money movement network and builds on the companies’ initial collaboration announced in Feb. 2022, which enabled Paysend’s US and UK customers to send money internationally and domestically to eligible Visa cards.
Digital wallets extend beyond consumers
Digital wallets are also becoming popular with small businesses. Mobile payments and digital wallets offer small businesses a range of benefits that can help them to streamline their cash flow. Additionally, their customers want to use digital wallets to make easy and quick payments without having to input all their payment credentials for each purchase. Businesses that don’t accept digital wallets may find that customers leave with their wallets for greener pastures to competitors that do offer these payment choices.
Global digital wallet volume is projected to reach $12 trillion annually by 2028. For Visa, integrating additional wallet aggregators and ‘wallet holders’ to Visa’s network is part of its ‘Network of Networks’ strategy to help strengthen its capabilities of facilitating money movement for the underbanked and underserved. Through these partnerships, Visa increasingly becomes a single point of access for initiating any transaction type and enabling the secure movement of money to multiple types of endpoints, including cards, accounts, and wallets.
“As someone who has experienced the challenges with sending money digitally across borders first-hand, I can attest to the dire need for making digital financial tools more accessible and creating more seamless cross-border payment experiences,” said Salazar. “That’s why I’m proud to be leading Visa’s mission to expand access to digital cross border solutions like cards and wallets across the globe through Visa Direct, for many years Visa has been championing financial inclusion but equally important is to bring more and more consumers in Digital inclusion, so consumers are not excluded from participating in the digital revolution.”