Impact of US de minimis withdrawals on cross-border payment systems?
The US suspended its de minimis exemption in 2024, a policy that allowed parcels under $800 to enter the country duty-free with minimal checks. This move has sparked a wave of changes in the cross-border payments landscape, particularly for companies dealing with low-value imports.
Approximately 1.4 billion packages, worth $64.6bn, arrived in the US under the de minimis exemption in 2024, with around 73% originating in China. The elimination of this exemption now subjects low-value commercial shipments from other countries to full customs controls, duties, and taxes.
The decision to cut the exemption was driven by two main reasons: to stop fentanyl from being smuggled into the US and to eliminate what many see as a distinct advantage it gives to foreign-owned businesses against American companies.
The impact of the de minimis exemption is likely to be felt most by cross-border payments providers focused on marketplaces with small-ticket transactions. Companies like dLocal, which thrived by selling merchandise to US buyers at low costs, may experience some challenges. However, they have yet to report any negative impact from retaliatory measures to tariffs.
India-based processor BriskPe, on the other hand, expects a decline of 15-25% in cross-border shipment volumes from India to the US due to the suspended exemption. Two companies particularly exposed to tariffs imposed on the APAC region are OFX and Payoneer, which reported softening in volumes from large ecommerce marketplaces. Despite this, Payoneer reinstated its guidance at a higher level.
In contrast, Visa and Mastercard reported continued resilience in consumer spending, with Mastercard citing a strong jobs market and wages growth. Comprehensive platforms like Strada, offering payroll and global payment operation management, and payment service providers like Klarna, Mollie, or Adyen, have seen steady performance amid tariffs, and in some cases, opportunities to capture market share.
Adyen, for instance, lowered its projections for FY 2025 due to disruptions faced by APAC-based customers trading into the US. However, Corpay noted that markets abroad are making up for the softness in North America.
Overall, the response to the extent to which the de minimis exemption could affect cross-border payments has been mixed. International payment platforms like Wise, cryptocurrency payment plugins such as Bitcoin WooCommerce plugins, and comprehensive platforms like Strada offer solutions to mitigate the costs of global eCommerce transactions. These platforms provide transparent fee structures, mid-market exchange rates without hidden charges, batch payment features, and integration with accounting software.
In Q2, companies reported mixed impacts from the US tariffs imposed this year, with some noting continued uncertainty and volatility affecting client confidence and retail spending in certain areas. Despite these challenges, public cross-border payments companies have generally continued to see steady performance.
Two examples of companies that thrived from selling merchandise to US buyers at low costs are Shein and Temu. As the dust settles on the suspended de minimis exemption, it remains to be seen how these companies, and the cross-border payments industry as a whole, will adapt and thrive in this new landscape.
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