Jan. 10, 2024 – The U.S. Faster Payments Council (FPC), a membership organization devoted to advancing safe, easy-to-use faster payments in the United States, today published its latest research report, titled The Practicalities of Cross-Border Payments in a Faster Payments World. This new report builds on the FPC’s previous white paper, Cross-Border Faster Payments, released in June 2021, which focused on use cases and user expectations for cross-border faster payments.
Developed by the FPC Cross-Border Payments Work Group, sponsored by Mastercard, the report delves into the history of cross-border payments, examining the evolution from ancient trade routes like the Silk Road to modern-day global financial systems. It explores the challenges faced by financial institutions in correspondent banking relationships, shedding light on regulatory compliance, security concerns, foreign exchange rate risks, and the impact of fintech players entering the field.
The Practicalities of Cross-Border Payments in a Faster Payments World also highlights the challenges faced by fintech companies, providing insights into regulatory compliance, security, foreign exchange rate risks, lack of transparency, high costs, interoperability, data privacy, competition with financial institutions, and liquidity management.
“Addressing the practicalities of cross-border payments in a faster payments world requires collaboration among financial institutions, regulatory bodies, and technology providers,” said Barry Tooker, Principal at TransactionBanker.com and FPC Cross-Border Payments Work Group Chair. “Innovations in financial technology, such as blockchain, real-time payment networks, and standardized messaging formats like ISO 20022, offer opportunities to streamline and improve cross-border payments. Overcoming these challenges is crucial for fostering global economic growth and enabling seamless international transactions.”
The report underscores the increasing pace of change in cross-border payments, mentioning key developments such as SWIFT's gpi, the global rollout of the ISO 20022 standard, the exploration of Distributed Ledger Technologies, the use of APIs, and the rise of Central Bank Digital Currencies.
"In a world of faster payments, understanding the practicalities of cross-border transactions is vital to navigating its complexities and challenges,” said Jonathan Holland, Vice President, Account Management at Mastercard and Vice Chair of the Cross-Border Payments Work Group. “The full ecosystem – from financial institutions to fintechs to payments networks – will continue to collaborate and innovate, leveraging regulation, interoperability and cutting edge technology to further optimize this critical payment process.”
The report emphasizes the transformative impact of new transaction banking initiatives, urging stakeholders to adapt to changing paradigms. It highlights the need for constant review and adaptation to emerging technologies, industry initiatives, mandates, and regulatory directives to ensure a smooth and efficient payments workflow.
"The evolving nature of cross-border payments demands a proactive approach. This report not only identifies challenges but also highlights opportunities for innovation and collaboration, paving the way for more efficient and secure transactions,” said FPC Executive Director Reed Luhtanen. “By working together, the FPC and our members continue to be a driving force in shaping the future of faster payments.”
The FPC prioritizes inclusion of diverse perspectives in tackling complex topics such as interoperability, identifying real-world solutions that can ease adoption of faster payments, managing security risks and fraud threats, addressing barriers to financial inclusion and cross-border payments, and more, as the organization paves the way toward a future of faster payments for all.
For more information on the FPC, its current work efforts or to join, visit FasterPaymentsCouncil.org.
Contact:
Elizabeth Grice
U.S. Faster Payments Council
720-737-7368
egrice@fasterpaymentscouncil.org
About the U.S. Faster Payments Council (FPC)
The FPC is an industry-led membership organization whose vision is a world-class payment system where Americans can safely and securely pay anyone, anywhere, at any time and with near-immediate funds availability. By design, the FPC encourages a diverse range of perspectives and is open to all stakeholders in the U.S. payment system. Guided by principles of fairness, inclusiveness, flexibility and transparency, the FPC uses collaborative, problem-solving approaches to resolve the issues that are inhibiting broad faster payments adoption in this country. For more information, please visit FasterPaymentsCouncil.org.