// FEATURE //

Yet when it comes to cross-border payments, a new Mastercard report shows they are running into the same brick wall: high costs, unpredictable delays and a lack of transparency that makes international trade riskier than it needs to be.

The report, Small businesses, big opportunity: Unlocking SME potential in Latin America’ s cross-border space, developed with Payments and Commerce Market Intelligence( PCMI) and K2, puts hard numbers behind these frustrations and points to how modernising payment infrastructure could fuel a wave of SME-driven growth across the region. Mastercard partnered with PCMI, a payments industry market intelligence firm, and K2, a business development consulting firm, to conduct research between January and March 2025.

The promise and problem of SME cross-border trade

SMEs are the backbone of the LAC economy, accounting for 98 % of businesses and 60 % of employment. Their current GDP contribution stands at 20 – 35 % in LAC, compared with more than 40 % in other emerging markets. They are also increasingly outward-looking: three out of five SMEs already work with international suppliers, and in Mexico and Brazil, 75 % plan to expand their global partnerships, according to the study.

This is not simply a sign of ambition. In today’ s volatile global trade environment – where geopolitical tensions, tariffs and shifting regulations are rewriting the rules – diversifying suppliers and expanding into new markets can be the difference between resilience and decline.

The opportunity is enormous. In 2024, global B2B crossborder transactions hit US $ 32 trillion, with projections pointing to US $ 45 trillion by 2030. LAC’ s share is growing rapidly: transaction volumes are expected to double from US $ 0.7 trillion in 2024 to US $ 1.4 trillion by 2030. SMEs are driving much of this expansion, with their 12 % annual growth rate in cross-border activity outpacing the global average of 6 %, thanks to the rise of e-Commerce and digital trade tools. Yet the infrastructure they rely on to move money internationally is not built for them.

A system designed for large corporations

The Mastercard study confirms what many SME owners already know: the current cross-border payment system was designed with large corporations in mind. As such, it often fails SMEs on the basics – speed, cost-efficiency and transparency.

Delays are the norm, not the exception. Forty percent of transactions take more than four days to arrive and nearly

20 % take more than 10 days. Costs are disproportionately high for small transactions: sending just US $ 250 can incur fees averaging 23.3 %, with some corridors reaching 30 %. Foreign exchange practices add hidden costs, with around 90 % of transactions( excluding those to the US) converted into local currency without the SME’ s consent, often at unfavourable rates. Failure rates are also significant— in some cases, such as payments from Brazil, 11 % of transactions fail outright.

These inefficiencies are not just an annoyance. For SMEs, where cash flow is often tight and working capital windows are short, waiting more than a week for a payment to clear can disrupt operations, damage supplier relationships and cause them to miss growth opportunities.

Why banks risk losing ground

Despite these issues, banks still handle 75 % of cross-border payment flows for SMEs, thanks to strong relationships and a trusted position in financial decision-making. But if they fail to adapt, that dominance is under threat.

FinTechs and other digital-first players are moving in fast, growing their share of the market from 25 % in 2024 to a projected 37 % by 2028. They offer what SMEs crave: faster settlement, transparent fees and seamless integration with the digital tools they use daily.

Traditional banks, by contrast, often rely on outdated systems and compliance-heavy processes that drive up costs and slow down transactions. A representative from a Mexican bank put it bluntly:“ Compliance and regulatory costs are our biggest challenge. We must have too many people dedicated to KYC / AML monitoring and legal requirements, making acquisition costs extremely high.”

For SMEs, that complexity translates into higher prices and more friction. As a Banco Pichincha executive noted:“ Price is the main issue. We( the banking industry) are losing customers because costs are too high and they turn to less reliable players.”

The hidden cost structure

High SME costs are not just the result of bank margins. Banks themselves face high operational expenses when serving SMEs, with correspondent banking fees making up 40 % to 60 % of total costs and manual processing, compliance and customer service adding another 40 % or more. This double burden creates a lose-lose scenario: SMEs are overpaying for subpar service and banks are struggling to make the economics work.

Mastercard’ s answer: Mastercard Move

To address these challenges, Mastercard is pushing for a structural redesign of the cross-border payment system for

Intelligent SME. tech

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