" class="no-js "lang="en-US"> New P20 report calls for greater industry collaboration to harmonise cross-border payments
Wednesday, November 30, 2022

New P20 report calls for greater industry collaboration to harmonise cross-border payments

Payments 20 (P20), the leading voice of the global payments industry, has published a new report calling for collaborative action within the industry to improve the efficiency and accessibility of cross-border payments.

The value of cross-border payments is estimated to increase from $150 trillion in 2017 to $250 trillion by 2027. The World Bank monitors the global average cost of sending a $200 international payment which in June 2022 stood at 6.01% with the target of halving this figure to 3% by 2030.

The advocacy group, alongside leading organisations including AfricaNenda, the Bank of Englanad, Bank of America, EY, FIS, Hogan Lovells, J.P. Morgan, Mastercard, NatWest, New York State Department of Financial Services, UK Payment Systems Regulator and The Clearing House, has created a new report entitled “Toward Borderless Payments”. The report outlines several best practices calling for collaboration between public and private sectors in delivering real improvements to the cost, speed, transparency and accessibility of cross-border payments.

The primary objective of P20’s payments report is to harmonise cross-border rules and regulations on interoperability, efficiency and cost while ensuring that there is a continuing decrease in fraud and money laundering.

The report provides some recommendations to help the industry move towards borderless payments:

  • Improving regulation and standards – Adopt ISO 20022 as the global messaging standard and improve collaboration between legislators and regulators. Develop common sharing standards for both data sharing and digital currencies that ensure robust regulatory compliance, alongside a standardized approach to KYC, AML and CFT sanctions.
  • Combating Financial Crime – Educate consumers on the culture of ‘Stop, Challenge and Protect’ method of combatting online fraud. Deliver and reinforce several key messages relating to online safety while accelerating the use of AI in monitoring and identifying suspicious activity
  • Improving efficiency – Implement best regional practices with the aim of linking standards globally. Create payment system operation hours with a 2–3-hour window of worldwide access, enabling real-time access and immediate confirmation without facilitating financial crime. Reduce friction by examining screening frequency, value thresholds, intermediary dependency, interlinking payment systems and reciprocal liquidity arrangements.

Duncan Sandys, Chief Executive Officer at P20, comments: “The inefficiency of cross-border payments is well known and lags behind the improvements seen in domestic payments. This stifles global trade and particularly hurts SMEs who are the engine room of economic growth. Harmonizing cross-border rules and regulations on interoperability, efficiency and cost while ensuring that there is a continuing decrease in fraud and money laundering would be transformational for the payments industry and global economy. However, this can only be achieved through collaboration between governments, regulators and industry. This report is designed to add to conversations already taking place among these organisations and help fuel the drive towards borderless payments.”

Mark Monaco, Head of Enterprise Payments at Bank of America, commented: “Harmonization of technology standards is achievable. The more substantive challenge is aligning or harmonizing schemes from a rules and regulatory perspective. The key items to focus on are AML and CFT rules, ensuring that those are applied consistently and comprehensively and sharing KYC and identity information.”

Victoria Cleland, Executive Director for Payments Bank of England, commented: “In a world of increasing global trade, cross-border payments are becoming far more important. Increased efficiency of cross-border payments is vital but difficult to achieve – the frictions in cross-border payments are many and deep. This is why the G20 published in 2020 a roadmap to enhance the whole cross-border payment ecosystem. It doesn’t just look at the core payment systems, or regulatory issues or data issues, but is instead holistic, with a focus on both improving the existing system and more forward-looking initiatives.”

Sara Castelhano, Managing Director & Head of EMEA Payments & Commerce Solutions Product at J.P. Morgan commented: “In my view, I don’t believe a single global payments area is achievable. But I do believe that, as a global payments industry, we can come together and agree on foundational information transfer between institutions and countries, such as using ISO 20022 and better interoperable standards across countries. That will ensure that transferring information becomes better, enriched and more secure.”

Simon Eacott, Head of Payments at NatWest, commented: “In time, all payments, domestic and cross border, will be instant or in near real-time. But already a great deal of progress has been made, the days when a cross-border payment could take days to arrive and required multiple banks with opaque fees are long gone. Today, most cross-border payments arrive in less than 30 minutes, and the enhancements we have seen to country corridors and domestic infrastructures continue to improve transparency and speed.”

Elena Whisler, Senior Vice President, Sales & Relationship Management at The Clearing House, commented: “ISO 20022 may not be a silver bullet for payments specifically or for others but, if utilized correctly, it does create an opportunity for more robust payment messages across different jurisdictions and even domestically will enable more information to be carried. So even though different systems may use ISO 20022 in slightly different ways and accommodating for local differences, a common standard allows for easier access and interoperability as the global environment becomes more concentrated and consolidated.”

People In This Post

Companies In This Post

  1. EXCLUSIVE: “Paying By Numbers” – Hugh Burden, AutoRek in ‘The Paytech Magazine’ Read more
  2. FF Awards 2022: The results are in! Congratulations to all the Winners! Read more
  3. FF Virtual Arena: International Payments Read more
  4. EXCLUSIVE: “Easing the Squeeze” – Rowan Brewer, Paymentology in ‘The Paytech Magazine’ Read more
  5. ITN Business and FINTECH Circle produce news-style programme exploring the role of fintech in society Read more