More than half of global consumers have made instant cross-border payments for goods and services, and that market is projected to grow.
Approximately 63% of consumers have used instant payments systems to send funds across borders to friends and family, according to a recent report by GlobalData. The study also estimated that European cross-border payments alone would experience nearly the same level of growth in the next few years.
“We’re seeing the dramatic use of instant payments in India, Brazil, and Asia, and it’s picking up steam in the European Union,” said Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research, in an earlier conversation with PaymentsJournal. “The real tipping point is going to be when we see the cross-continent and cross-ocean payments influx, and I don’t think we’re too far away from that happening.”
Prime Candidates
Instant payments are considered the future because they are fast, accurate, and less expensive. They are also a prime candidate for cross-border payments, which often face issues with slow settlement times, regulatory hurdles, and fraud.
There have already been cross-border expansion efforts by some of the largest instant payments players. After India’s success with UPI, the National Payments Corporation of India’s international branch entered talks to explore expanding the UPI model to countries in South America and Africa.
UPI is also set to connect with instant payments services from Malaysia, Thailand, Singapore, and the Philippines over the next few years in a venture called Project Nexus. UPI had already linked with Singapore’s PayNow last year.
Cross-Border Powerhouse
Project Nexus is facilitated by the Bank of International Settlements, a consortium of seven major central banks. BIS has also initiated Project Agora, a collaboration with public and private financial organizations to explore how tokenized commercial bank deposits can be integrated with central bank digital currencies on a single platform.
One participant in Project Agora is the Society for Worldwide Interbank Financial Telecommunication (SWIFT) which has the potential to be a cross-border powerhouse in its own right. SWIFT operates a global messaging network that it has already used to transfer tokenized assets. The organization is moving forward with digital asset transaction trials next year.
Although there are many cross-border payment solutions in development, it’s still unclear which one will scale to become the standard for instant cross-border payments. Last year’s failure of the P27 project in Europe proved that a common standard isn’t the only issue hindering cross-border payments—banks and regulators also have to buy in.
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