The importance of a global payments infrastructure

Making digital cross border payments with a mobile phone

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The G20’s payments programme is moving into the practical phase of its plans to improve cross-border payments. Where does it fall short?

What is this article about? The bottlenecks that need to be addressed to improve cross-border payments.

Why is this important? A strong infrastructure will resolve many of the pain points payments firms and customers experience. The G20 and FSB are working on changes.

What’s next? The FSB will release a report on next steps in November.

The G20 is prioritising the Roadmap for Enhancing Cross-border Payments and some progress has been made over the past two years on the foundational elements to address persistent issues in the market concerning speed, cost, access, and transparency.

According to Paul Bedford, senior manager of cross-border payments policy at the Bank of England, regulations and regulatory standards are vital to the FSB’s roadmap, and about five or six building blocks intend to tackle issues around transparency and the need for institutions to upgrade their systems to a minimum global standard.

“There are complex compliance challenges across a range of different requirements that bite on payment service providers and infrastructures, and those are not just limited to traditional prudential rules or conduct rules or AML rules,” says Bedford, who discussed the issues and outlook at a webinar held by The Payments Association.

There are also problems around data standards, data exchanges, local privacy rules, and data nationalisation requirements that need to be address as part of global reforms. As such, the payments industry needs to engage the regulators in a dialogue to tackle the perceived frictions.

According to Bank of England data, cross-border payments are predicted to grow from $150 trillion in 2017 to $250 trillion in 2027. A robust global payments infrastructure that is as quick as the movement of goods and services is necessary to manage the demand of real-world business activities.

Vikesh Patel, head of securities and strategies at SWIFT, identified three areas that need particular attention to improve cross-border payments that haven’t been extensively addressed yet:

  1. Capital controls: Otherwise referred to as end-country controls, which are restrictions, compliance issues, manual interventions, and documentation requirements. Changes here would establish a better balance of payment reporting.
  2. Batch processing: Transactions that occur during offline hours within the cross-border payment ecosystem that adds friction because the automated clearing house (ACH) system is noticeably absent in some markets.
  3. Going against the sun: Although many investments have made the process more efficient around operating hours and internal system processing, moving to real-time internal system processing of ledgers and going against the friction is still a source of conflict.


Ali Nalbant, co-founder and CEO of Arf, adds that capital controls are a significant barrier. A solution is unlikely to be available in the short term.

Nalbant explains that it takes some companies two years to register and get licensed in certain countries like Canada and Singapore, which discourage payment innovators from gaining access. He believes these cold attitudes from the regulatory authorities stem from the trust issues they have for new technology and establishing what regulations should be implemented to protect against abuse.

Although cross-border payments are becoming quicker, more transparent, secure, and resilient, more still needs to be done.

Top 10 issues to resolve on cross-border payments

  1. System upgrades to a minimum global standard
  2. Global standards to ensure a level playing field to support industry growth
  3. Achieving transparency to tackle friction
  4. Aligning crypto transactions with national regulatory frameworks
  5. More deployment of biometric and technology solutions to address identity issues and fraudulent activities
  6. Wider adoption of digital wallets to tackle liquidity problems
  7. More APIs to address transparency problems
  8. Successfully achieving interoperability across devices, currencies and jurisdictions
  9. Creating technology that minimises the regulatory and licensing barriers
  10. Gaining agreement on the compulsory requirement to implement cyber and cloud security architectures.

Colin Digby, global head of strategic client coverage at Crown Agents Bank, says the most noticeable recent trend is massive pressure on institutions to provide cheaper money disbursements, close to real-time, and efficient foreign exchange rates. However, banks are doing more to meet demand. He explains that tier one and tier two banks across the OECD markets are looking into extending their services beyond traditional markets.

SWIFT is collaborating with some industry players on the issues concerning cross-border payments and is trying to build a solution.

“There has been continued work on speed by the banking community,” explains Saskia Devolder, strategic programme director for cross-border payments at SWIFT.

Data published by SWIFT showed that 44% of Swift GPI payments are credited to the end beneficiary within five minutes and 57% within 30 minutes.

Nevertheless, Devolder points out that the current median time for cross-border payments using GPI is 90 minutes, which is above the 1-hour that FSB recommends.

Devolder says, however, that there are ongoing conversions to interlinking, meaning institutions are looking at how they can interlink their systems to support and further achieve a quicker settlement, with the goal of achieving instant settlements.

Digby adds that the API-led approach is helping more rapid deployment of technology solutions, allowing the market to evolve at a faster pace. He believes that mobile wallets and QR codes play a significant role in disbursing the non-traditional or less developed market.

“API is a proven technology that needs to be rolled out,” agrees Devolder. “SWIFT has started, and other banks are about to start,” she explains, adding that this progress could resolve the transparency concerns highlighted by the G20.

Devolder believes collaboration and communication between the public and the private sector has increased substantially due to the G20 agenda.

There may be more collaboration as the G20’s plans move to the next stage.

G20 cross-border programme could address the issues

After two years of research and analysis, the G20 and the FSB will switch towards practical implementation, focusing on:

  1. The payment system interoperability and extension
  2. Legal, regulatory and supervisory frameworks, and
  3. Cross-border data exchange and message standards.


In November 2022, the FSB will publish an update on its implementation approach for monitoring progress towards the roadmap’s targets.

“The practical work involved will require global coordination, strong involvement from the public and private sectors and sustained political support,” the FSB said in a letter to the G20 finance ministers and central bank governors on 14 February 2022.

The FSB stressed that this phase will “require investment in order to upgrade systems, processes and technologies”.

Tackling global payment infrastructure bottlenecks will improve accessibility and performance and enhance customers’ trust in global payment solutions. In the coming year, more efforts will be channelled towards improving infrastructure and interoperability around Central Bank Digital Currencies (CBDCs).

Considering the peculiarity of technological infrastructure around CBDCs and other stablecoins, the FSB will mostly design and implement more operational frameworks to standardise CBDCs as a solution to the global payments infrastructural deficit.

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