Enhancement of cross-border payments
Safe and efficient cross-border payments can offer benefits to all through lower costs, faster speed, greater transparency and improved access. Improved cross-border payments support international trade, e-commerce and financial inclusion while helping to safeguard monetary and financial stability. The G20 has made faster, cheaper, more transparent and more inclusive cross-border payments a priority, while at the same time maintaining their safety. To address cross-border payment frictions, the CPMI together with other international bodies have launched initiatives to enhance wholesale, retail and remittance payments, focusing on:
• payment system interoperability and extension;
• cross-border data exchange and message standards; and
• legal, regulatory and supervisory frameworks.
About the programme
The G20 launched the roadmap for enhancing cross-border payments in 2020 with the goal of making cross-border payments cheaper, faster, more inclusive and more transparent. The G20 roadmap is an ambitious and comprehensive initiative aimed at addressing the challenges of cross-border payments. The roadmap has evolved over time. At its launch, it was structured into 19 building blocks. Drawing on foundational work done in the first two years, the G20 endorsed a revised Roadmap in 2023. This revision aimed to shift efforts from analysis to implementation by focusing on practical initiatives with the potential to achieve meaningful and timely progress. It also sought to strengthen public–private sector collaboration. The revised Roadmap featured 15 action items aligned with three priority themes of payment system interoperability and extension, legal, regulatory and supervisory frameworks; and cross-border data exchange and message standards.
To date, international bodies have made considerable progress in delivering on their Roadmap commitments. Most of the 15 action items are now completed or nearing completion.
Cross-border payment priority themes
The area of payment system interoperability and extension covers key characteristics of individual payment systems, in particular their operating hours and access policies, as well as their interactions with other payment systems in the form of interlinking arrangements. Fast payment systems (FPS) typically operate around the clock, whereas real-time gross settlement (RTGS) system operating hours are generally more restricted. Extending operating hours – even short of 24/7 – and aligning them across jurisdictions can enhance efficiency by enabling improved liquidity management and faster payments processing, while mitigating settlement risk.
Direct access to payment systems is often constrained for foreign or non-bank payment service providers (PSPs). The reasons for this could include legal and regulatory constraints, as well as operational or business decisions by the payment system. Expanding access while maintaining safety standards can lead to increased competition, enhanced innovation, greater transparency and improved financial inclusion.
Finally, while there are some examples of RTGS systems with interlinking arrangements, the focus in recent years has mainly been on interlinking FPS. Evidence from operational interlinking arrangements suggests that they can contribute to faster, cheaper and more transparent cross-border payments for the corridors they serve.
Relevant CPMI publications:
- Extending and aligning payment system operating hours for cross-border payments
- Improving access to payment systems for cross-border payments: best practices for self-assessments
- Interlinking payment systems and the role of application programming interfaces: a framework for cross-border payments
- Liquidity bridges across central banks for cross-border payments
- Exploring multilateral platforms for cross-border payments
- Operational and technical considerations for extending and aligning payment system operating hours for cross-border payments: An analytical framework
- Facilitating increased adoption of payment versus payment (PvP) – final report
- Service level agreements for cross-border payment arrangements
- Regional payment infrastructure integration: insights for interlinking fast payment systems
- Linking fast payment systems across borders: governance and oversight – final report
- Changing the clock: practical approaches to extend payment system operating hours
- Acta non verba: interlinking fast payment systems to enhance cross-border payments
Message standards and formats continue to vary significantly across jurisdictions, infrastructures, and messaging networks. The G20 roadmap identified the fragmentation of payment messaging standards as one of the factors contributing to frictions in cross-border payments. The growing global adoption of the common international financial messaging standard ISO 20022, alongside application programming interfaces (APIs), by payment systems and financial institutions offers the potential for greater interoperability, bringing benefits to enhanced cross-border payments.
However, adopting new standards and technologies alone is not sufficient to materially improve cross-border payments. Harmonising the data being exchanged is essential. Harmonising data requirements, combined with the significantly greater messaging capability of ISO 20022 and the flexibility of APIs, can promote improved interoperability in cross-border payments and help achieve the G20 objectives.
Relevant CPMI publications:
- Interlinking payment systems and the role of application programming interfaces: a framework for cross-border payments
- Promoting the harmonisation of application programming interfaces to enhance cross-border payments: recommendations and toolkit
- Safety and efficiency through payment pre-validation: spotting issues before money moves
- Harmonised ISO 20022 data requirements for enhancing cross-border payments – updated report
- The future of financial messaging: navigating the ISO 20022 migration journey
Promoting an efficient legal, regulatory and supervisory environment for cross-border payments to maintain their safety, efficiency and integrity is a key priority of the roadmap. This priority theme includes the Financial Stability Board’s (FSB) promotion of greater alignment in data frameworks related to cross-border payments, enhanced consistency in the regulation, supervision and oversight of banks and non-bank PSPs and the Financial Action Task Force’s (FATF) work on updating the application of anti-money laundering recommendations.
Relevant FSB and FATF publications:
- FSB: Recommendations for regulating and supervising bank and non-bank payment service providers offering cross-border payment services: final report
- FSB: Recommendations to promote alignment and interoperability across data frameworks related to cross-border payments: final report
- FATF: Updated Recommendation 16 on payment transparency