CPMI published a report recommending improvements to the infrastructure for cross-border payments made by individuals and businesses. The report sets out a holistic view of cross-border retail payments to analyze the market and identify issues and challenges. It draws on a survey of almost 100 established and innovative providers of cross-border retail payment services worldwide. The report concludes that there is scope to improve the infrastructure for payments made by individuals and businesses that cross borders.
The report highlights that, although there is choice of front-end providers, the available back-end clearing and settlement methods do not offer choices, with the only feasible option often being correspondent banking. An increase in choice could potentially improve the efficiency of the cross-border retail payments market by matching different users to providers that focus on their needs; for example, those users that value cost over speed could elect to send payments through a slower but cheaper arrangement, and vice versa. However, the safety of future arrangements requires effective oversight from financial authorities to ensure that appropriate risk management standards are in place. The report concludes that more diversity of back-end clearing and settlement arrangements could result in cross-border retail payments that are quicker, cheaper, and more transparent. Such diversity could include:
- An improved traditional correspondent banking system
- Greater interoperability between domestic payment infrastructures
- Greater interoperability between closed-loop proprietary systems
Keywords: International, PMI, Cross-Border Payments, Fintech, Distributed Ledger Technology, ISO 20022, CPMI
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