The G20 focus on cross-border payments
One area that lags sorely behind, however, is cross-border payments. In fact, the G20 flagged cross-border payments as a global priority at its last meeting in 2020.
It’s no surprise why: the process is laden with complexity. Lack of data standardisation and interoperability, various and sometimes conflicting compliance requirements, disparate operating hours and outdated legacy platforms are just a few of the challenges that contribute to high costs, slow transaction rates, limited access and lack of transparency.
Acknowledging that the Covid-19 pandemic has affected the payments landscape by turning many nations’ focus towards domestic matters, the G20 commission has emphasised the importance of taking the long view. Globalisation is a reality, and reducing the friction within cross-border payments is necessary for long-term economic growth.
Today, perhaps due to these challenges, a vast majority of consumer payments are conducted domestically. But there are two problems here:
First, the demand for rapid cross-border payments is rising. Financial institutions must find a way to provide the same level of simple, instant payment services for cross-border payments as they currently offer for domestic payments. If they don’t, they’re sure to be outpaced by third-party, Fintech upstarts.
Second — and perhaps more interestingly — this disproportionately benefits large, single-currency markets such as the US, the UK or the SEPA zone. In a region like the Nordics which has to contend with the increased complexity of multiple currencies and clearing systems, streamlining cross-border payments is vital for commercial growth and competition.