A new Mastercard study reveals that small and medium-sized enterprises in Latin America face high costs, delays and hidden fees when sending international payments. The report calls for faster, more transparent and cost-efficient solutions to unlock SME growth across the region.
Small and medium-sized enterprises (SMEs) in Latin America and the Caribbean (LAC) are ready to step onto the global stage. They have the ambition, the business relationships and the digital momentum. Yet, when it comes to cross-border payments, a study 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.
A new Mastercard 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 shed light on the evolving landscape of cross-border payments for SMEs in LAC 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. They are also increasingly outward-looking: three out of five SMEs already work with international suppliers and in Mexico and Brazil, three-quarters plan to expand their global partnerships, the study says.
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 study says the opportunity is enormous. In 2024, global B2B cross-border 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 eCommerce and digital trade tools.
Yet the infrastructure they must rely on to move money internationally is not built for them, the study says.
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.
Among the study’s findings:
- 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. Around 90% of transactions (excluding those to the US) are converted into local currency without the SME’s consent, often at unfavourable rates
- Failure rates are significant. In some cases, such as payments from Brazil, 11% of transactions fail outright
These inefficiencies are not just an annoyance, the study says. 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, the study says. They enjoy strong relationships with their clients and hold a trusted position in financial decision-making. But if they fail to adapt, that dominance is under threat.
According to the report, 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, are said in the study to 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, the study says, 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
The Mastercard research also highlights a critical point: high SME costs are not just the result of bank margins. The banks themselves are facing 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 SMEs, the study says, outlining its solution, Mastercard Move, as a portfolio of money movement capabilities designed to make international payments faster, cheaper and more transparent.
Key benefits include:
- Cost efficiency — reducing intermediaries and eliminating hidden fees
- Transparency — providing real-time traceability of costs and delivery times
- Speed — enabling same-day or even real-time settlements in more than 150 markets
Walter Pimenta, Executive Vice President, Commercial and New Payment Flows at Mastercard for LAC, said: “Small and medium-sized businesses are the silent engine of Latin America. They innovate, generate employment and keep our economies alive. To reach their true potential they need more than resilience: they need a financial infrastructure that accompanies them on their global journey.”
He added: “We are reimagining how international payments should work for SMEs: simply, securely and adapted to their realities. With Mastercard Move, we help banks lead this transformation, providing them with tools to offer comprehensive solutions that impact where it matters most: liquidity, agility and trust. Today’s SMEs are tomorrow’s multinationals. And together we can build the infrastructure they deserve.”
Lessons from fintechs: the digital-first blueprint
The study says Fintechs have already shown that cross-border payments can be handled differently. Their platforms focus on intuitive interfaces, instant currency conversion at competitive rates and transparent fee structures.
For SMEs, the study says, this means less time spent navigating complex banking processes and more control over their finances. The Mastercard study suggests banks can learn from these models, integrating similar capabilities into their own offerings through partnerships with technology providers.
Banks that do so could not only retain their SME clients but also capture new growth. As the Promerica representative explained: “We recognise the vital need for faster access to funds for SMEs, especially when maintaining strong supplier relationships. That’s why we are actively engaging with partners to explore solutions that improve transaction speed and support the sustainability of small businesses in the region.”
A holistic approach to SME financial needs
The study acknowledges speed and cost are crucial – but says they are not the whole story. SMEs also need better access to working capital, fraud protection and streamlined cash flow management. “Banks focus too much on products but SMEs only care about day-to-day operations,” said Ginger Siegel, North America Small Business Lead at Mastercard. “They need better access to capital, cash flow management, secure payments, fraud protection and time-saving solutions.”
That, the study says, requires a mindset shift. Rather than offering a suite of disconnected products, financial institutions must think in terms of integrated solutions that fit naturally into an SME’s workflow. This could mean embedding payment services directly into eCommerce platforms or ERP systems, offering dynamic FX options or providing instant credit lines tied to cross-border transactions.
Why change now?
The study stresses the urgency as clear. Cross-border trade is no longer a side business for SMEs — it is becoming a core driver of revenue. And as digital adoption accelerates, expectations for payment speed, transparency and affordability are rising fast.
Those expectations are being shaped by consumer experiences. SMEs that can make instant peer-to-peer transfers or see real-time payment status in their personal banking apps will naturally demand the same in their business dealings. If their bank cannot provide it, they will look elsewhere.
The study says modernisation is not optional – it is a competitive necessity.
The path forward
For banks and financial institutions in LAC, the study shows the roadmap to SME cross-border payment modernisation has three main pillars:
- Streamline costs and operations — Reduce reliance on correspondent banking where possible, automate manual processes and simplify compliance without compromising security
- Enhance transparency — Provide SMEs with clear, upfront cost breakdowns and real-time payment tracking
- Invest in partnerships — Collaborate with fintechs and technology providers to bring modern, digital-first capabilities to SME clients
If executed well, the study says, this transformation could unlock a virtuous cycle: SMEs gain faster, more affordable access to global markets, boosting their competitiveness and profitability; banks strengthen client loyalty and open new revenue streams; and the broader LAC economy benefits from increased trade activity.
Looking ahead
Mastercard plans to continue working with financial institutions to modernise payment infrastructure in the region, building on the findings of the study.
Mastercard says that for SMEs, the shift cannot come soon enough. The current system is holding them back from achieving their full potential in global trade. But with the right infrastructure, they could move from being the silent engine of the LAC economy to a powerful, visible force in the global market.
Mastercard says the message from its research is clear: modernising cross-border payments is not just about moving money faster. It is about enabling the next generation of Latin American multinationals to thrive.
