Improving cross-border payments

Payments from and to other countries are still often cumbersome, time-consuming and expensive

Cross-border payments are transfers in which the receiving party and the sending party are located in different countries. This does not only occur when companies buy and sell products or services abroad, but also, for example, when foreign seasonal workers want to transfer (part of) their salary to a family member in their home country (these are referred to as "remittance payments"). In many cases, this is now cumbersome, time-consuming and costly compared to the efficient processing of domestic payments and payments within a region of connected countries such as the euro area, as the different systems behind the processing of payments are not connected or aligned.

Identifying areas for improvement

Cross-border payments are more complex than domestic payments, as they involve multiple countries, currencies, time zones and jurisdictions. This often means that different laws and regulations are involved. To address these complexities, the G20 summit identified improving cross-border payments as a priority. It developed a roadmap for improving cross-border payments in 2020. This roadmap identified 19 workstreams or building blocks that are working towards improving cross-border payments in the coming years. The elements of the roadmap can be adjusted on the go, in line with developments over time. Ongoing commitment and cooperation between the public and private sectors is necessary to achieve these ambitious improvements.

Concrete targets

Concrete quantitative improvement targets have been set last year for all forms of cross-border payments. For example, by the end of 2027, 75% of all cross-border payments must be processed within 1 hour, and the remaining 25% within 1 day. Costs should also be reduced, with remittance payments of $200 not being allowed to cost more than 3% worldwide on average, and no more than 5% anywhere by the end of 2030. 90% of all persons who want to make or receive remittance payments must have electronic access to them. Finally, service providers must provide paying and receiving parties with a minimum list of information in order to improve transparency.

In order to achieve these targets, analyses on specific sub-topics were carried out in all workstreams last year. Among other things, discussions were held between public and private parties involved to gain a better understanding of the problems that need to be resolved and to seek advice. On the basis of the information gathered, instruments are now being developed to help the relevant parties in the market for cross-border payments to resolve the problems where possible. How problems will actually be resolved depends on the local situation. For example, one of the workstreams addresses the issue of increasing the use of and access to central bank money accounts, by looking at both the possibility of broadening access and extending opening hours. 

We also do our part

At DNB, we believe it is important that payments are secure, efficient, reliable and accessible. We want to make it easier for all consumers to pay in a secure way, including for seasonal workers, for example, who want to make payments to their country of origin. We are involved in the global implementation of the roadmap by actively participating in several workstreams. For example, we participate in the workstream for expanding access to central bank accounts and broadening opening hours. In addition, we contribute to the issue of interoperability between the national systems that are behind payment processing, as well as to innovative workstreams such as Central Bank Digital Currency (CBDC).

The future

The implementation of the Roadmap will continue at international level in the years ahead. Ultimately, the aim is to improve the processing of all types of cross-border payments and achieve the targets set. Until then, there will be annual roadmap updates at the end of each year and reports to the G20 on all steps taken to improve cross-border payments.