**The Untapped Potential of Cross-Border Payments in Emerging Markets**
Cross-border payments for businesses in emerging markets have not yet reached their full potential, despite the fact that trillions of dollars in transaction volume are processed annually through banks and fintech platforms. Currently, business-to-business (B2B) payments make up the majority of cross-border payment volume, accounting for 97% of the total.
According to a report by Airwallex, the value of cross-border payments is projected to grow by 60%, reaching $250 trillion by 2027. Between 2018 and 2022, the value of these payments increased by $25 trillion to $150 trillion. This highlights the significant growth potential in this market.
**The Rise of Fintech Solutions in Cross-Border Payments**
Traditional banks have long been the go-to option for businesses when it comes to cross-border payments. However, high costs and slow processes have led some businesses to explore fintech solutions that offer lower costs and faster settlements. One such platform is Conduit, a B2B cross-border payments platform.
Conduit initially entered the market as an API connecting fintechs, neobanks, and legacy financial institutions with crypto-backed earning products. However, after the crypto market downturn in 2022, the company pivoted its focus to B2B cross-border payments. This shift came after the realization that the practical challenges of using decentralized finance (DeFi) and stablecoins were still significant for most businesses.
**Addressing Real-World Challenges for Businesses in Latin America and Africa**
Conduit recognized the pressing pain points faced by traditional businesses in Latin America and Africa when it comes to cross-border payments. These challenges include difficulties in accessing US dollars, reliable SWIFT connections, and other essential payment rails.
To address these challenges, Conduit allows businesses to pay US dollars directly to bank accounts via ACH or SWIFT, even without a US entity. By leveraging its technology, Conduit ensures faster payouts and more efficient money transfer processes. The company partners with local banks in each country it operates, such as Brazil and Nigeria, to facilitate these payments.
**Expanding Market Presence and Overcoming Challenges**
Conduit has experienced significant growth since its pivot to B2B cross-border payments. The company’s annualized transaction volume has surged from a few hundred million dollars to over $5 billion. Expansion into African markets, including Kenya and Nigeria, has contributed to this growth, with a 25% month-on-month revenue increase.
Despite the challenges presented by fragmented local currencies and complex currency connections in Africa, Conduit sees significant potential in this market. The company plans to hire a team managed by Eric Wainaina, a prominent figure in African financial data distribution, to address these challenges and lead expansion into other African markets.
**The Future of Cross-Border Payments**
Conduit’s roadmap includes plans to enable faster cross-border B2B payments for businesses in other regions, such as Asia. The company aims to achieve profitability and break even by the end of the year. By leveraging modern tech stacks and rebuilding the back end for global payments, Conduit aims to better serve businesses in frontier markets and connect them with the global economy.
Overall, the potential for growth in cross-border payments in emerging markets is immense. With the rise of fintech solutions like Conduit, businesses in these markets can benefit from lower costs, faster settlements, and more efficient payment processes. As Conduit expands its market presence and addresses the challenges unique to each region, it is poised to make a significant impact in the global cross-border payments landscape.