While the pandemic has fuelled the growth in digital payments and online retail, this shock was largely confined to the domestic payment flows tracked by our data. However, 2022 has brought another shock—the war in Ukraine—and we expect this to disrupt cross-border payment flows. Following the digital disruption in local retail payments, customers are increasingly demanding a similar revolution in cross-border payments, driven by real-time settlements, APIs and Open Banking, a system that allows users to securely share financial data with third-party applications πŸ™‹‍♂️


Currently, most cross-border payments still travel through the old-fashioned correspondent banking network, where groups of banks communicate with each other through a cumbersome network of correspondent banks to facilitate fund transfers. This flow is underpinned by the SWIFT financial messaging service and is used by more than 11,000 financial institutions, including banks and securities firms, from over 200 countries 🌍

We expect increasing involvement from government entities to facilitate the development of the fintech sector, promote financial inclusion or aid the flow of remittances from overseas workers. This process will also be facilitated by the development of central bank digital currencies. These digital currencies aim to provide efficient and inclusive payments services and also emerge as trustworthy alternatives to private projects such as stablecoins, cryptocurrencies that peg their value to another currency or commodity.

Disrupting cross-border payments will mean adopting innovative solutions and emerging technologies:
πŸ”Ή APIs have been a game-changer for retail payments, providing end-to-end tracking of payments and confirmation of transactions to all parties involved.
πŸ”Ή Tokenisation has also emerged as a major way to ensure security, improve efficiency and raise the transparency of payments.
πŸ”Ή Blockchain technology employs encrypted distributed ledgers that eliminate the need for any intermediaries but still provide verification of transactions in real time.
πŸ”Ή Real-time payments will also become a cornerstone for the acceleration of cross-border payments.

The coronavirus pandemic has changed people’s lifestyles and their interaction with the world, leading to a growing emphasis on data privacy, faster payments, transaction security and a seamless experience for digital services. From migrant workers sending money to their families at home to merchants paying bills to their international suppliers, cross-border payments are too vital to be passed over for technological disruption πŸš€

Economist Intelligence: EIU

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