Cross-border payments – Reducing frictions and unlocking potential

The G20 nations have endorsed a Roadmap for enhancing cross-border payments that seeks to reduce costs as well as increase speed, access and transparency for international payments - a core area for growth and expected to increase in transaction value by $100 trillion in the 10 years leading up to 2027.

Cross border payments - transactions across international borders and currencies - are integral to the activities of financial institutions; internationally connected corporates; enterprises trading cross-borders; and of course, consumers accessing products and services, such as making remittance payments to friends and family.  Increasing globalisation and innovations, such as mobile wallets, have driven demand for cross-border payments and this trend is expected to continue: the value of these payments is projected to increase by 100 trillion (c66%) from almost $150 trillion in 2017 to over $250 trillion by 20271.

Despite increasing demand, the underlying cost drivers remain entrenched. Payment service providers are required to meet compliance and funding obligations; work across incompatible and often legacy technology; and rely on fragmented industry systems and standards. These challenges create frictions across the cross-border payment chain, increase costs, impede availability of funds, and lead to sub-optimal customer outcomes. Average remittance cost, by example, can be between 4-6%2 of the funds transferred in some instances – a sizeable portion of the remittance and a portion of which could otherwise be available for the payer or payee’s use.

The G20 roadmap for enhancing cross-border payments

The G20 nations endorsed a ‘Roadmap’ for enhancing cross-border payments drawn up in October 2020 by global coordinating bodies FSB, CPMI and BIS3 that sets out targets to address core challenges in cross-border payments by end 2027:

  • Costs: For retail payments of between 1-3% with the exception of the remittance cost target, where a 2030 date has already been set as a UN Sustainable Development Goal.
  • Speed: For a large majority (e.g., 75%) of payments to provide availability of funds for the recipient within one hour from the time the payment is initiated.
  • Access: For all users to have at least one option for sending and receiving payments.
  • Transparency: All payment service providers to provide, at a minimum, a defined list of information concerning cross-border payments to payers and payees including e.g., total transaction cost, time to deliver funds, funds tracking, and terms of service.

The Roadmap is driver for substantive change with its global scale and breadth of ambition. It’s focus on enhancing benefits for the core customer segments of wholesale, retail and remittances could deliver improved outcomes for consumers and industry. It has been set in consultation across key stakeholders including central banks; and critically it builds on public-private collaboration.

Achieving the G20 roadmap ambitions

While the ambition of the Roadmap is welcomed, the scope of the work required to operationalise supporting initiatives is substantial and will need to be considered against competing industry programmes many of which are mandated. Fulfilling the ambitions of the Roadmap will require coordination, investment and collaboration between public and private bodies.

Implementation of international payments data standard ISO20022 will enable increased interoperability and reduce frictions through standardisation of its richer, structured payments data. The Bank of England has already adopted its use as one of the foundational elements for its RTGS infrastructure renewal programme4 while the CPMI is promoting harmonised data requirements for ISO 20022 messages in cross-border payments. Industry and practitioner guidance however will be instrumental for consistent and coordinated implementation if the full capabilities of ISO20022 to drive interoperability and standardisation are to be realised.

Public-private collaboration will be pivotal for the global ambitions of the Roadmap are to be achieved and here UK Finance plays a key role. In October, we hosted an industry roundtable with the topic of ‘Taking forward the G20 Roadmap’ and a discussion of broader cross-border payment considerations. Attendees included members from international financial institutions, card schemes, fintechs and advisory firms. Industry practitioners and policy leads reviewed opportunities in cross-border payments; explored points of friction including the impact of regulatory requirements around data; and considered industry’s priorities in enhancing cross-border payments.

UK Finance also has representation on a CPMI led public-private taskforce in support of the Roadmap. Taking this forward with members and stakeholders we will identify and consider practical actions, specifically the proposition of interlinking of domestic faster payments systems, to enhance cross-border payments.

These are just two examples of the intersection of international policy ambitions and industry experience, intended to realise the Roadmap, that UK Finance support. We will continue to engage with members and stakeholders; participate in initiatives that promote public-private collaboration; and support industry-led efforts to mitigate frictions, reduce costs, improve speed, transparency and access. Ultimately, these will enhance and further unlock the potential of cross-border payments across the multiple use cases to the benefit of end-users and the industry. 


1 Media Publications, Calculated on the basis of CAGR=5%

2 Depending on method of transfer. Remittance Prices, World Bank

3 TheFinancial Stability Board (FSB), the Bank for International Settlements (BIS), and Committee on Payments and Market Infrastructures (CPMI).

4   The Bank of England have a programme in train for the renewal of their Real-Time Gross Settlement (RTGS) link

5 Harmonised ISO 20022 data requirements for enhancing cross-border payments – final report