Why Money Moves Across Borders – Part 1: B2B and B2C
Business-initiated payments represent by far the biggest cross-border payments opportunity.
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The world is getting smaller thanks to rapid and wide-scale digitization, and payments of all types are increasingly moving between different countries. Now, frictionless cross-border payments are becoming a major concern for both governments and private industry, as everyone from big corporations to mom-and-pop businesses to individual consumers find themselves sending money internationally more often.
In this three part series on why money moves across borders, we’ll look at all the key types of cross-border payments and the main use cases that drive volume within each one. In part one of three, we’re examining business-to-business (B2B) and business-to-consumer (B2C) transactions.
By the end, you’ll have a clear picture of all the most common ways cross-border payments flow from business users, and an understanding of why business-driven transactions are by far the most critical and high-value category of cross-border payments.
B2B: The Most Significant Cross-Border Payment Flows in a Shrinking World
In a globalized world, business-to-business transactions are the key driver of cross-border payments. In 2023, B2B cross-border payments grew by just 5%, but exceeded $158 trillion in volume. By comparison, B2C and C2B cross-border payments combined for a “mere” $4.7 trillion.
B2B will continue to be the most critical category going forward, with international supply relationships becoming more and more common. After the global pandemic, when an alarming number of small businesses found their supply chains disrupted or choked off, diversifying suppliers became a critical way to manage risk. Now, half of small and medium-sized enterprises are doing more business internationally than in 2021, and 75% are planning to increase their international business in the future.
Why the Money Moves
International Supply Chains: Trade in physical products, components, and inputs is a huge driver of B2B cross-border payments. Everything from crude oil to critical minerals to food, industrial equipment and consumer goods moves between countries and requires cross-border payments to be made to suppliers.
Cross-Border Service Procurement: Services are increasingly sourced internationally, particularly in the technology industry. “Digitally enabled services,” like cloud computing and software licenses, are the fastest growing category of global trade, and knowledge work, like coding and technical support, is now regularly outsourced to overseas suppliers.
Intra-Company Payments: Multinational corporations regularly make payments between subsidiaries and affiliates in other countries. Profit transfers, revenue sharing and intra-company loans and investments all fall under B2B flows, and are common reasons companies move money across borders.
International Licensing and Royalties: Companies regularly license intellectual property, like patents, owned by other companies abroad. The use of that IP requires either revenue sharing or the payment of regular royalties, which must either be remitted directly using cross-border payments, or paid to a local subsidiary, which will then use an intra-company payment to repatriate the money.
B2C: A Small, But Growing Cross-Border Use Case
B2C cross-border payments accounted for roughly $1.6 trillion of total cross-border flows in 2023. Much like small businesses, the rapid digitization of the world has made it much easier for consumers to engage with businesses in other countries. That naturally increases B2C flows, but it also creates opportunities for money to flow back to consumers as well. Since 2019, B2C cross-border payment flows have increased by roughly 33%, second only to C2B growth at 40%.
Why the Money Moves
Marketplace Disbursements: Online marketplaces now make it easier than ever for consumers to sell anything and everything. The top marketplace sites, like eBay, Reverb.com and others, use access to a global customer base as a key differentiator over local listing sites, like Craigslist or Kijiji. In most cases, the marketplace makes international transactions easier by acting as an intermediary, accepting the payment directly from the buyer and then issuing a payout to the seller once delivery is complete. That makes marketplace disbursements B2C by nature.
Gig Economy Disbursements: The global gig economy is driven by online platforms that function as marketplaces for services instead of goods. In 2024, the global gig economy was estimated to be $556.7 billion, with over 16% CAGR expected between 2025 and 2032. As with consumer marketplaces, platforms like Fiverr and Upwork, make engaging gig workers in different countries a frictionless process. Buyers pay the platform in their home currency, and the platform sends out a delayed payment to the service provider upon completion of the work in any currency of their choice.
While it can be argued that gig payouts could be considered B2B flows, these payments are still generally considered B2C due to the “side hustle” nature of many gigs.
Consumer Refunds: Increased international C2B commerce inevitably leads to increased international returns and refunds, which fall under B2C cross-border payment flows.
Insurance Disbursements: Cross-border insurance disbursements are one-time payments where the beneficiary of the payout is in a different country to the insurer. Examples of common cross-border insurance payouts include life insurance benefit payments to family abroad, reimbursements for international medical expenses, and more.
Investment Income: Corporations often have to pay dividends or interest to investors in other countries. While these flows are B2B in cases where the payee is a VC firm or angel investor, payouts to retail stockholders fall under the B2C category.
Key Takeaways
B2B payments dominate cross-border flows, accounting for over $158 trillion in 2023, driven by international supply chains, service procurement, intra-company transfers, and licensing royalties.
Diversification of international suppliers is a key trend, especially after pandemic-related disruptions, with many small and medium-sized enterprises expanding global business.
B2C cross-border payments are growing steadily, reaching $1.6 trillion in 2023, fueled by online marketplaces, the gig economy, consumer refunds, insurance payouts, and investment income.
Part Two: Consumer Cross-Border Payments
Business-initiated transactions represent the largest opportunity in cross-border payments, and companies that find ways to serve business users better stand to be the big winners in the cross-border payments revolution.
But with global commerce now just a few clicks away and annual international income remittances on the rise, consumers also play a big part in the cross-border payments ecosystem. In part two of this series we’ll focus on consumers, including how they move money to businesses and fellow consumers in other countries, and why they’re so important to the future of cross-border payments.