the global investor
Global Trade is Not the Same Anymore:
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How New Trends and Demands Changed the Game
oday, both the global trade and cross-border payment landscape is at the center of several trends. Technology innovation, greater competition, changing customer demands, the need for increased security and safety in payments has created a new industry dynamic that values speed and agility. “It is an exciting time for payments,” noted Victoria Cleland, executive director for banking, payments, and innovation at the Bank of England (BoE). And she is right. It’s been 70 years since the global multilateral economic system was born and countries decided to build bridges and establish partnerships through trade. General Agreement on Tariffs and Trade, followed by the World Trade Organization, opened up borders to the free flow of goods and services and helped nations reach substantial progress and great results. Among other things, increased global trade also created opportunities for entrepreneurs, perhaps the biggest being the growing demand for simple, fast, secure, and convenient cross-border payments. We have an impressive number for your right here: international payments are expected to reach $3 trillion by 2023.
What is more , the boom in cross-border commerce is writing the next chapter in global payments as well. In 2019, online sales hit a record high and as much as 57 percent of global online shoppers are
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now cross-border shoppers. Today, e-commerce is considered one of the key drivers of the digital transformation taking place in our economy and society. During recent months, digital commerce witnessed an extremely rapid acceleration in growth — and the main thing behind it is the Covid19 crisis. As trade in traditional goods and services decreased, trade in digital goods and services became even more important. Before the coronavirus pandemic, cross-border e-commerce was already rapidly expanding, but since the crisis, growth has become exponential. For instance, in the US and Canada, overall e-commerce orders have increased by 129 percent compared with last year. Similarly, the digital payments market is now expected to grow this year by 11 percent worldwide and as high 15,9 percent in places like
China. What is more, experts say that growth in digital services and digital trade will be critical to a global economic recovery. When you think about it, the Fourth Industrial Revolution not only brought new innovative technologies to the game but also managed to change the nature of global trade itself, as data flows are becoming more important than physical trade. Susan Lund, an economist, and partner at McKinsey & Company, a global management consulting firm that advises many of the world’s largest and most powerful institutions, noted that “Trade is no longer coming only in big boatloads and cargo container ships. The growing segment today is the trade of digital goods and services — for example, downloading a book or a movie or making a phone call on Skype.“ It’s hard to measure, but McKinsey found that cross-border bandwidth
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