Performance of stocks related to cross-border payments in 2023
Over the past year, the cross-border payments industry has witnessed a significant transformation, with pricing becoming more competitive due to technological advancements and currency shifts.
One of the most notable changes has been the rise of the Chinese yuan in global cross-border payments. According to recent data, the yuan's share in these payments increased from about 3.7% in late 2023 to over 4% in early 2024. This shift in currency usage could have a profound impact on pricing dynamics in global payments.
On the platform side, fintech innovations have been making waves. Virtual card services like Airwallex have introduced zero international transaction fees and interbank FX rates, drastically reducing costs for businesses engaging in cross-border transactions compared to alternatives that charge hundreds of CAD per year in fees.
These trends suggest that while the overall market for cross-border payments is becoming bigger and more complex, pricing pressure driven by technology and new currency ecosystems is likely pushing prices down or making fees more transparent and competitive for businesses with the right tools.
However, it's important to note that global inflation remains a factor, with some regions experiencing low inflation or deflation that could ease cost pressures. Tariff pressures, while indirect, may still affect associated costs.
Looking ahead, the cross-border payments industry is expected to face challenges and opportunities in the new year. Digital money transfer companies have experienced the strongest success, with Visa and Mastercard also reporting a year of solid growth. However, the tougher investment environment and increased expectations for companies have contributed to a split in performance within the industry.
Investors are now looking for long-term plans that they feel confident in, rather than big immediate gains. Companies like Adyen, which recovered a significant amount of its H2 drop after publishing revised earnings projections for the next few years, are likely to gain favour.
As we move into 2024, we will be examining the trends shaping the biggest challenges and potential benefits for the cross-border payments sector. The industry's evolution is an exciting development to watch, and we look forward to seeing how it continues to adapt and grow.
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