Cross-Border Payments

Cross-border payments are vital for economic development by enabling international trade and finance. Traditionally, entities providing payment services maintained a broad network of correspondent banking relations. This network, however, contracted significantly over the past decade. Increasing costs, lack of transparency, and limited speed seem to be the main drivers for market participants to look for alternatives to the established correspondent banking model. Simultaneously, new market initiatives emerge, and innovative technologies allow for smart solutions. In this paper, we present three market solutions and discuss why more modern approaches offer the potential for a faster, more cost-efficient, and transparent cross-border payment market but require concerted effort from public and private stakeholders to gain further market traction. Despite the challenges, payment service providers should monitor activities in the payments sector closely to benefit from new developments.