Cross-border Payments: What’s Next?

By Bob Stark May 1, 2018

With global trade volumes continuing to rise, cross-border payments are increasing too. Indeed, research by Accenture forecast that the overall value of cross-border payments would rise by 5.6 percent per year between 2016 and 2022.

As companies become more global, efficient working capital becomes a higher priority. Companies therefore have more need than ever for cheaper and faster payments. However, under the correspondent banking system cross-border payments typically involve a number of different parties. As such, cross-border payments often cost more and take longer to reach their destination, while the remittance data needed for reconciliation purposes can sometimes get lost in transmission.

The next few years could see the cross-border payments space transformed by the rise of technologies such as API and blockchain, while developments such as ISO 20022 XML and SWIFT gpi will continue to yield benefits. New providers are also expected to rise to the fore: the Accenture report also predicts that most of the growth in the coming years – amounting to around $30B – will be mopped-up by non-bank payment providers.

Additional reading: Eliminating the Pain from Payments with a Treasury Management Solution

Let’s take a closer look at what the future may hold.


Despite the problems, the area of cross-border payments has seen considerable innovation in the last few years. First came the Single Euro Payments Area (SEPA), the goal of which was to make cross-border euro payments as cheap and easy as domestic payments. SEPA includes schemes for credit transfers and direct debits, using ISO 20022 XML to achieve standardization. The initiative has brought numerous benefits for corporates in the region, including faster settlement, increased transparency over pricing and opportunities to streamline cash management structures.

Meanwhile, the use of XML payment initiation (PAIN) formats – specifically ISO 20022 XML – has gained ground at a global level and is now used by a number of real-time payment systems. That said, XML PAIN comprises a number of different format variants rather than a single format, which has led to challenges in practice.


Also significant is the arrival of SWIFT global payment innovation (gpi). Launched in January 2017, SWIFT gpi improves cross-border payments by providing end-to-end payment tracking, sending remittance data unaltered and offering transparency over bank fees. End beneficiaries can be credited in the same day with many payments settling within 30 minutes (as of this writing).

The service is already being used by over 150 banks and represents almost 10 percent of SWIFT’s cross-border traffic. With treasurers and CFOs increasingly concerned about fraud and cybercrime, the most significant benefit of SWIFT gpi is arguably the real-time tracking facility and the ability to check that funds have been delivered to the beneficiary.

Rise of the APIs

Another area of interest is the use of APIs in cross-border payments. Europe’s Second Payment Services Directive (PSD2) is set to change the face of payments by stipulating that banks need to open up their technologies to third party providers. While the regulation is not specific about how this access should be provided, the industry focus is squarely on the use of APIs to achieve this – and banks are supporting innovation in this space. Standard Chartered, for example, has launched an open banking API developer portal for transaction banking, allowing third-party developers to test APIs in the bank’s sandbox.

Banks are also actively exploring how APIs can be used to connect to treasury management systems and ERP systems. Last year, Citi launched an API solution which will allow the bank’s treasury services clients to connect with Citi via their own TMS or ERP. This type of development could support a shift from batch file transfer to real-time integration, thereby enabling corporates to send payments to banks faster – and receive enriched bank reporting data and payment acknowledgements.

The faster treasurers can receive notification of the success or failure of payment delivery, the more effectively they can manage their daily liquidity or respond to any payment issues. The flipside is that instant visibility brings a greater expectation that treasurers will respond rapidly to the information they receive.

Building on blockchain

Meanwhile, blockchain and distributed ledger technology (DLT) is expected to drive greater transparency and collaboration in the area of payments.

This could bring some major advantages for CFOs and treasurers. For one thing, blockchain could make payment delivery more efficient and secure. For another, it could support the rise of new payment service providers which can deliver payments using blockchain instead of traditional correspondent banking methods.

These opportunities are being explored at a number of levels, with banks joining consortiums or setting up their own research labs in order to develop opportunities around blockchain. SWIFT has also recently completed a blockchain proof of concept with 34 banks focusing on the use of blockchain technology for real-time Nostro reconciliation.

Looking further ahead, payment service providers which leverage open APIs in the first instance could eventually adopt blockchain technology. This would enable them to benefit from the secure characteristics of a blockchain network. It could also enable them to deliver payment messages alongside supporting documentation such as invoices and remittances – thereby speeding up the cash application process for treasurers and controllers.

The future’s bright

In conclusion, there’s a lot to be excited about in the cross-border payments space. From the arrival of new technology to an increase in innovation driven by a competitive marketplace, current and future initiatives and developments could transform the way that such payments are handled. Watch this space.

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