The long-standing premium associated with cross-border payments, historically justified by slow, fragmented, and operationally complex processes, is rapidly eroding. A significant portion of global commerce now leverages payment networks designed for faster and more predictable international money movement. This evolution, coupled with concerted efforts by central banks, commercial banks, and technology providers to reduce friction in international settlement, is fundamentally reshaping the competitive landscape for financial institutions.
Recent PYMNTS Intelligence research, conducted in collaboration with Mastercard and detailed in “The Cross-Border Opportunity: What Global Sourcing by U.S. SMBs Means for Payment Providers,” underscores the scale of this transformation and the urgent demand for improvement. The study found that 57% of U.S. SMBs engage in international sourcing, purchasing goods or inputs from overseas suppliers. Among these internationally active firms, a substantial 43% identified faster payment processing and settlement as their top priority. Furthermore, 27% expressed a clear interest in changing their current cross-border payment providers, signaling a market ripe for disruption and innovation. The report also highlighted that 63% of internationally active SMBs predominantly pay overseas suppliers in U.S. dollars, and notably, FinTechs received the highest customer satisfaction ratings among non-cryptocurrency providers.
Settlement Becomes Standardized Infrastructure
This demand for efficiency aligns with a broader industry movement towards standardizing settlement itself. A prime example is Project Agorá, a Bank for International Settlements (BIS) initiative involving major central banks and commercial banks. As PYMNTS reported earlier this year, the project has expanded its testing phase to include the Federal Reserve Bank of New York alongside central banks from Europe, Japan, Korea, and Mexico. Project Agorá is exploring how tokenized commercial bank deposits and central bank money could facilitate more efficient cross-border settlement. This represents a departure from historical innovation, which often emerged through individual bank networks, bilateral arrangements, or proprietary payment corridors. Agorá signifies a collaborative approach where policymakers and central banks are actively shaping common settlement frameworks from the outset. While still experimental, with unresolved questions surrounding governance, regulation, interoperability, and adoption, Project Agorá is part of a larger trend that includes the widespread adoption of ISO 20022 and various instant-payment connectivity projects.
The Commoditization of Money Movement
The critical question for banks and FinTechs is the implication of widely available, faster, and more predictable settlement. Adam Israel, COO at FinTech Mesh, posits that the fundamental economics of moving money will face increasing pressure. “The basic mechanics of moving money are going to be commoditized first,” Israel told PYMNTS. He elaborated that traditional financial institutions historically derived significant margins from the “structural friction of holding and clearing funds over multi-day settlement windows.” As this friction diminishes, institutions will be compelled to seek new avenues for differentiation. Israel emphasized that compliance and oversight are emerging as increasingly vital competitive factors. “The advantage will belong to platforms that can prove a robust, audit-ready oversight infrastructure that manages risk appetite end-to-end, rather than those just selling a faster pipe,” he stated.
Value Migrates to Surrounding Services
Yousuf Rizvi, principal at Ridgeway Financial Services, echoes this perspective, foreseeing a similar transition. “Once settlement itself becomes a utility, competitive advantage shifts to everything that surrounds the transaction,” Rizvi explained to PYMNTS. He identified a new set of differentiators: “Underwriting, risk scoring, compliance automation, treasury management, customer experience and embedded financial services.” Firms that have traditionally relied on correspondent banking spreads, remittance markups, or opaque foreign exchange margins are likely to face intensified pressure as advanced settlement capabilities become more broadly accessible. Rizvi asserts that this shift is already in motion. “When movement of money becomes a commodity, the margin moves to the work around the money,” he said, pointing to areas such as “Multi-currency liquidity optimization, real-time FX hedging, automated sanctions and AML screening, and the customer relationship layer” as new profit centers for institutions.
This conclusion aligns directly with the PYMNTS Intelligence findings, which indicate that SMBs, while seeking speed, also demand transparency, robust foreign exchange capabilities, comprehensive customer support, and payment certainty. These evolving demands suggest a market where settlement increasingly functions as foundational infrastructure, while value and competitive advantage migrate to the sophisticated services built around it. For financial institutions, the implications are profound: owning a payment rail may become less critical than owning the customer relationship, managing liquidity with superior efficiency, and adeptly guiding businesses through an increasingly intricate regulatory environment. In this evolving landscape, the ultimate winners may not be merely the institutions that move money fastest, but rather those that make global commerce genuinely easier to manage once the payment itself becomes a routine, friction-free transaction.
