The pace of innovation in cross-border payments is relentless, with regular announcements of new technologies and partnerships. Yet, even as the ecosystem evolves, adoption by commercial users remains slow and uneven. As shifting tariffs force global businesses to reconfigure supply chains, financial institutions have an opportunity to step in with guidance and solutions tailored to meet rapidly changing cross-border payment needs.

In the Report on Tech Meets Tariffs: Cross Border Payments in 2025, Hugh Thomas, Lead Commercial Payments Analyst at Javelin Strategy & Research, examines the impact of tariffs across multiple industries, explores how financial institutions can offset a potential decline in cross-border revenue, and highlights the opportunity for new approaches.

Weathering the Tariff Storm

Many cross-border payments providers may serve customers considering re-shoring their supplier base to domestic partners to avoid tariffs. For instance, a U.S. company with an established Canadian partner might now weigh whether it is worth absorbing a 10% cost increase to maintain the relationship or switch to a stateside supplier.

Tariffs affect each industry differently, making these decisions complex.

“In the U.S. oil and gas industry, approximately 30% of oil and gas inputs come from Canada,” Thomas stated. “The supply chain for refining is designed to take Canadian oil sands, and there is no other source currently available in Argentina.”

Conversely, the grocery industry sources much of its produce from Mexico, making it easier for companies to switch to U.S. suppliers or pivot to new products.

Another consideration is which industries maintain higher days of inventory. For example, the top 10% of the construction industry’s inputs come from cross-border sources but carry roughly 130 days worth of inventory on their books.

“They can weather the storm if tariffs are temporary and negotiable by Trump on a company-by-company basis,” Thomas said. “Financial institutions should focus on supporting industries that rely heavily on cross-border payments.”

Making the Donuts

If tariffs persist and U.S. companies switch to domestic suppliers, financial institutions could lose revenue from cross-border payments. However, there are several ways these institutions can adapt.

“One way is if a business needs new suppliers, perhaps an escrow arrangement where the first six months of payments are contingent on delivery,” Thomas suggested. “There’s also the opportunity to move some customers to commercial cards for quicker avoidance of Know Your Supplier (KYS) expenses and potential rebate revenue from card providers.”

Another approach is to enhance cross-border payment efficiency, addressing long-standing issues such as high transaction fees, slow settlement times, fraud, currency conversions, and regulatory barriers.

Recently, there has been an influx of systems and solutions aimed at making cross-border payments easier, cheaper, more automated, and transparent. These range from credit card network-managed programs to projects driven by a consortium of central banks.

Some believe that connecting real-time payment systems globally could offer the most effective cross-border solution.

Digital assets like crypto and stablecoins have been proposed as ideal solutions for cross-border payments, due to their decentralized nature and blockchain-based security.

While each solution offers unique benefits—some gaining more traction than others—the widespread implementation continues to lag. “Adopting these technologies is moving at a glacial pace,” Thomas observed. “The people managing business payments lack the time to tweak existing solutions.”

Two Forces Driving a Reckoning

Because operations take precedence for many enterprises, financial services providers must offer products that deliver immediate impact without requiring significant customization or build-out. Additionally, any cross-border solution must be both essential and practical.

Once institutions identify the right use case and solution, they will well-position themselves to support their commercial customers amidst a potential seismic shift in supply chains.

“These crisis moments have the potential to drive change if they force everyone to reconsider current processes,” Thomas said. “The unprecedented evaluation of supply chains and the broader move towards globalization are significant forces at work right now.”

“There are two forces at play, with numerous technologies waiting for serious attention. Perhaps all this disruption can push people to recognize that business as usual is not an option moving forward,” he concluded.