In-Depth: How Does the Cross-Border Payment Experience Stack Up? (AI Translation)

【周刊提前读】深度：跨境支付体验比肩国内？ 这是一场全球性的变革

In recent years, the cross-border payments landscape has faced significant challenges, including high costs, slow transaction speeds, limited access, lack of transparency, and poor user experiences[para. 1]. Unlike local payments, which are usually free and completed in real-time, cross-border payments often take 3-5 days and incur substantial fees, leading to increasing pressure on service providers to close this gap[para. 1]. Nium, a global real-time cross-border payment service provider, emphasizes that improving this experience requires coordinated efforts from governments, monetary authorities, and commercial entities across various regions[para. 4].

Efforts to enhance cross-border payments gained momentum when the G20 declared it a priority in 2020, leading the Financial Stability Board (FSB) and the Committee on Payments and Market Infrastructures (CPMI) to identify critical barriers, like fragmented data standards and complex compliance requirements[para. 5]. A roadmap with specific Key Performance Indicators (KPIs) for 2027 was proposed, but by October 2024, the FSB's progress report indicated targets were far from being met[para. 5].

Fintech companies have emerged as key disruptors, offering digital-native solutions that challenge traditional financial institutions and seize market share within the cross-border payment arena[para. 8]. Digital wallets and platforms like those by GCash in the Philippines showcase significant growth and market penetration, driven by their ability to meet high consumer demands efficiently[para. 22]. Fintech solutions have captured an increasing portion of the cross-border payments market over the years, primarily due to their innovative and flexible technology stacks allowing rapid adaptation to market changes[para. 27].

Traditional banks are responding to these changes by investing heavily in improving cross-border payment sectors and collaborating with fintech companies and digital wallets[para. 18][para. 27]. Emphasis is placed on the importance of evolving customer relationships through comprehensive payment strategies[para. 8][para. 18]. The rise of digital banking and mobile platforms as alternative payment methods has driven banks to integrate such solutions into their offerings[para. 22][para. 27]. Banks like Citibank partner with providers such as PayPal and Mastercard to extend their services globally, capitalizing on convenient and popular payment solutions[para. 22].

In the wholesale payments sector, banks dominate due to their traditional reliance on correspondent banking networks. However, these networks lead to lengthier transaction chains and high costs, elevating opportunity costs for users[para. 29]. Correspondent banking mechanisms are costly, with operational complexities such as compliance verification at each stage. Emerging technologies like Distributed Ledger Technology (DLT) aim to reduce the costs and risks associated with multi-currency transactions, offering banks enhanced liquidity management tools[para. 11].

Countries are examining central bank digital currencies (CBDCs) as a strategic movement to streamline cross-border payments using DLT[para. 34]. Projects such as mBridge, which involve several central banks, explore using CBDCs for more secure, cost-effective, and transparent payment solutions within cross-border landscapes[para. 47][para. 48]. The mBridge project demonstrates the potential of DLT to transform financial markets, aiming to reduce transaction processing time from days to seconds and eliminating the need for correspondent banks[para. 50][para. 52].

Security issues remain a focal point, with institutions needing to balance efficiency and safety through risk management solutions like data analytics and risk-alerting data sharing[para. 63]. Regulatory bodies focus on establishing more uniform frameworks across jurisdictions to enhance compliance, led by working groups like the FSB's Legal, Regulatory, and Supervisory Issues Working Group[para. 74]. Innovative platforms, like mBridge, implement compliance checks through customizable modules compliance checks, providing an efficient process for cross-border payment transactions[para. 79].

In summary, while challenges persist, there is significant ongoing collaboration among fintech companies, banks, regulators, and global bodies to address these issues and reshape the global cross-border payment landscape[para. 1][para. 8][para. 47].