Cross-border payments goals remain elusive

Dive Brief:

• G20 member countries will likely not meet their cross-border payment targets by 2027, according to a Bank of International Settlements report released Dec. 11.
• The participating countries aimed to achieve several goals by 2027, including reducing the cost of retail payments and remittances; speeding up payments; increasing payment transparency; and improving access to wholesale payments, retail payments and remittances, according to the report.
• While the majority of governments have made progress toward those goals, multiple hurdles have prevented the participating countries from realizing them, such as the loftiness of the goals, the short time frame to achieve them, insufficient private-sector support and other technological and geopolitical factors, the report noted.

Dive Insight:

The G20 forum consists of 19 nations, including the U.S., the U.K., South Africa, Germany, Japan and China, plus two regional organizations, the African Union and European Union.

Though G20 nations have edged toward cross-border payment targets, some of their desired outcomes remain far off. For instance, only 35% of cross-border retail payments are credited within an hour after initiation, a much lower proportion than the 75% goal, the Bank of International Settlements noted in its report.

Technological innovation alone won’t facilitate progress toward the G20 cross-border payment goals, the BIS said in its report. Though governments can address payment barriers domestically, cross-border payments pose a greater challenge, because each nation’s institutions and regulatory structures can complicate coordination between countries, the report noted. 

“Technology cannot resolve challenges in areas such as governance across borders or the misalignment of incentives and efforts among a diverse range of stakeholders,” the Bank of International Settlements wrote in its report. “Further, some technological solutions, while attractive to end users, may be less resilient or secure than established arrangements and could even pose a threat to monetary or financial stability.” 

The BIS has called attention to the need for intergovernmental cooperation in the past. In 2023, the organization published a report noting that countries must collaborate with one another strategically to achieve a fast, globally connected payments system.

At that time, the BIS tallied at least 70 domestic faster payment systems worldwide that could become part of an interlinked network. 

In addition to monitoring the progress of G20 member nations toward a better global payment system, the organization has sought the help of private-sector collaborators to improve cross-border payments. Last year, the BIS called upon private-sector financial firms to participate in Project Agorá, which aimed to determine whether smart contracts could navigate common cross-border payment issues such as time zones and various legal, regulatory and technical hurdles.