26 November 2014

New Research Paper – Cross-border Low Value Payments and Regional Integration: Enablers and Disablers

Work has now been completed on a SWIFT Institute research grant that reviews the enablers and disablers of cross-border low value payments and regional integration.

You can download the paper here.

Cross-border Low Value Payments and Regional Integration: Enablers and Disablers

Leo Lipis
Colin Adams


This paper discusses the enablers and disablers of cross-border low value payments and regional integration. The current landscape for cross-border payments is dominated by correspondent banking relationships. Relying on one or more correspondent banks to send payments abroad is slow and expensive, and both sending and receiving banks often have little to no visibility of payments as they are being processed, and they often do not know what fees will be deducted until a payment arrives. As the speed of payments increases in domestic environments, banks, corporates, and consumers have come to expect faster and more efficient payments across borders as well, and the current reality of correspondent banking is increasingly falling short of customer needs and expectations.

As regions integrate economically and promote open trade among member states, maintaining fragmented national payment systems can become a hindrance to larger goals of economic development and cooperation. Any form of regional integration will necessarily reflect local realities, including the level of domestic payment system development, technological and economic progress, the level of payment sophistication, political and business cooperation, and the level of integration desired by key stakeholders in the region. Pursuing regional payments integration means dealing with issues such as establishing centralized management, finding a common settlement currency, setting a targeted scope, implementing common data standards, and harmonizing IT infrastructures. Navigating these local realities and vested interests to develop a cross-border scheme or infrastructure that benefits local stakeholders is a complex task. Coupling local knowledge of domestic markets with lessons learned from other regions can be a key factor in ensuring success in regional payments integration.

This paper will focus on key questions such as how “success” is defined for regional payment schemes and infrastructures, what enables and disables successful implementation, what the key features of schemes to foster cross-border transactions are, and the role that central banks and other stakeholders play in regional payments integration. It is meant to inform and guide participants who wish to pursue regional payments integration by offering lessons from other geographies and examining measures of success in a variety of regional payment models.

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