Consumer Protection in Cross-Border FinTech Transactions

Abstract

Consumer protection refers to the practice of safeguarding goods and services purchased by buyers so that unfair practices should not be encouraged in the marketplace.  In the FinTech sector consumer protection indicates the establishment of laws and regulations with other measures for ensuring fairness along with responsible treatment of customers during financial transactions. Cross-border transactions help merchants connect multiple acquirers which helps in improving increasing break approval rates, decreasing interchange costs, and enhancing risk diversification. Cross-border payment indicates any type of transaction where the payer along with the payee is situated in different countries. The cross-border payments are anticipated to reach more than “$250 million” by the completion of 2027. Also, global corporations move approximately “$23.5 trillion” which is equal to 25% of global GDP. It has been observed that mobile wallets are seen to be “the fastest-growing payment method” in Southeast Asia where the number is anticipated to increase from 311 million to 440 million by 2025. On the other hand, the report of JP Morgan has shown that credit cards are a suitable payment method in North America which accounts for 47% of e-commerce transactions (JP Morgan, 2021). In Africa, M Pesa has been one of the most effective payment methods which serves nearly 48 million customers there. The platform makes its operations in countries such as “Afghanistan”, “Egypt”, “Lethozo”, “Ghana”, “the “Democratic Republic of Congo” and others. In Europe and the UK Klarna acts as the dominant service provider within the “Buy Now Pay Later” aspect. Afterpay is available in Australia and New Zealand (He, 2021). However, there are significant challenges in cross-border payments such as “higher costs”, “slower processing of transactions” and “local payment regulations and compliance”. In this context, it needs to be mentioned that for FinTech firms operating globally consumer protection is essential in cross-border transactions. During the time of performing transactions effective technologies such as Artificial Intelligence, Blockchain, and machine learning help FinTech firms to synchronise data of customers and store those in a systematic manner (Pant, 2020). AI-enabled technology helps FinTech firms assess the global digital market trends based on which they can serve their customers effectively. Moreover, it helps FinTech firms formulate strategic business decisions that significantly impact increasing profitability. FinTech throughout the globe have focused on leveraging technology for revolutionising cross-border systems by implementing low-cost solutions in the case of international payments (Barclay & Tagai, 2022). It has enabled FinTech firms to increase their global reach.