Cross-Border Payments Need Innovative Solutions
There’s no doubt that the payments industry has seen massive growth. Technological innovation has led to the development of solutions that offer more security, more speed, and more financial inclusion. An article by the OMFIF highlights DMI’s “Future of Payments 2022” report, which explores the initiatives that innovators are pursuing to develop new payment structures, and how they’re addressing the challenges within the cross-border payments industry.
When it comes to domestic payments, progress is well underway. Digital payment solutions are plentiful and accessible, especially in emerging markets where mobile payment solutions have seen significant adoption. However, this cannot be said for cross-border payments. In emerging markets, users often must bear the exorbitant costs to send funds to family members.
Another issue that is explored is the difficulty in connecting various domestic payment environments. This is mostly due to the complexity of their own unique architecture. Traditional players are doing their part in enhancing their services, especially with security and speed.
The report also looked to gauge attitudes towards the central bank and the central bank digital currency. Respondents believed that central banks didn’t have the improvement of cross-border payments as their primary goal when it comes to developing CBDCs. However, respondents said that the interlinking of domestic CBDCs could prove beneficial for cross-border payments.
We have written about CBDCs as an effective delivery method in cross-border payments here.
“Most of the CBDCs being tested around the globe by central banks are for purposes of retail use cases, where the digital currency simply takes the place of ‘walking around cash’ in bank notes and coins,” said Steve Murphy, Director of Commercial Payments at Mercator Advisory Group. “However, the real cross-border implication is in wholesale CBDCs. More recent testing of large value payments using CBDCs is where we will see much development over the coming year.”
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