Cross-border payment technologies: innovations and challenges

Cross-border payments (XBP), particularly remittances and retail transactions, remain more costly, slower, less accessible, and less transparent than domestic payments. The continued inefficient XBP arrangements, in contrast to progress made in domestic payments using new technologies and innovative models, reflect that private actors alone cannot overcome the many market failures that hinder XBP. The most binding constraint concerns the limited interoperability which relates to the multi-sided market frictions in XBP and the institutional differences between countries. These, ultimately, only proactive and collaborative public sector efforts can overcome. Key priorities are therefore greater harmonization of standards, especially for message transmission, more effective compliance regimes, and promotion of competition.

JEL classification: E41, E42, E51, E52, E58, G21, G28

Keywords: payments systems, cross-border, technology, harmonization, standards, digital innovation, wholesale, retail, remittances

The views expressed in this publication are those of the authors and do not necessarily reflect the views of the BIS or its member central banks.