Technology is the ‘key delta’ in the race for cross-border payments advancement; according to a new whitepaper from the Payments Association, which celebrates innovation and collaboration across the payments industry.
Cross-border payments have continued to develop throughout the last decade, driven by the globalisation of trade, capital, and migration flows. Despite these factors and successes, the reality is that cross-border payments remain overly expensive, leaving the most vulnerable behind.
While we see domestic payments enjoying consistent advancements and innovations to become instant and completely digital, the story does not read the same for cross-border payments which are yet to benefit from the transformative power of digital technologies.
In light of this, the Payments Association’s cross-border working group delves into the challenges that financial institutions (FIs) face when trying to deliver cross-border payments in its new whitepaper titled ‘King for a Day: Charting the future of cross-border payments‘.
One of the report’s key takeaways is centred around industry scrutiny, which it says must ‘pivot’ away from legacy regulatory issues and focus more on implementing technologies, with “adjustable, rules-based inputs, that can interface between distinct regimes”.
Rasika Raina, senior VP of product management, cross-border payments at Mastercard, explained: “Our competition is archaic technology, not the banks. The problem is that today the industry is, in some cases, using 40 to 50-year-old technology and arrangements, like correspondent banking, to address a $156trillion cross-border payments sector.”
‘Cross-border still represents a huge opportunity’
Gary Palmer, CEO of Payall, also offered his take on the report: “Globalisation touches every country, city and even remote villages. The way we work, receive medical care, communicate, shop, pay and travel have all changed dramatically from technological transformations.
“Overall, just about every part of our lives is radically different than just a few years ago and unrecognisable from 50 years ago. Not so in cross-border payments. The question we must keep trying to answer is can money move at the speed of data globally?
“This whitepaper, completed through industry survey and interviews with leading experts, challenges the status quo with provocative questions, relevant research, and new ideas and ultimately suggests that tech and new paradigms will transform the complex, high-risk and manual mess we call cross-border payments.”
Tony Craddock, director general of The Payments Association, commented: “Payments continue to grow at a phenomenal rate and, within this, cross-border still represents a huge opportunity. This vital piece of research is key in illustrating how technology will be the key driver for the industry to reduce the amount of friction, so people keep more of their money and receive it faster.”