Hands paying on mobile on digital payments sistem

Cross-border payments can’t rely on tech alone. Here are 4 ways to make them work

Yan Xiao
Project Lead, Digital Trade, World Economic Forum
Leslye Sihuay
Consultant , MPA UC Berkeley

  • Despite huge growth in cross-border payments, they face significant operational challenges.
  • A fragmented regulatory landscape is impeding technology’s ability to facilitate cross-border payments.
  • A new World Economic Forum paper outlines how to overcome these roadblocks.

In our globalized era, the ability to transfer funds internationally underpins many pillars of our world economy; from a family member sending remittances home to large corporations conducting business overseas, cross-border payments play a crucial role. Their value is estimated to reach $250 trillion by 2027, representing a 60% increase in a decade. Despite the fast growth and importance of cross-border payments, these transactions face monumental challenges, including speed, cost and transparency. Addressing these issues is no longer a matter of convenience, but a critical stepping stone towards a more inclusive global financial ecosystem.

Tech is not enough

Cross-border payments act as the arteries of the global economy, vital for maintaining the health of global commerce, supporting international development and fostering economic growth. For millions worldwide, these transactions mean the difference between poverty and sustenance, and for businesses, they represent an opportunity to expand, innovate, and thrive in the international market.

Both public and private sectors are making big strides in tech advancement to address the gap between what a global economy needs and what today’s cross-border payments system can provide. However, despite revolutionary technological advancements, the call for swift, transparent and cost-effective international transactions is persistent and increasingly clamorous. It begs the question: Why, in a world bounded only by the limits of our technology, do cross-border payments still have to navigate a maze of complexities? The answer is not in the technology itself, but in the shadow it casts – one shaped like the intricate dance of regulations, where each country moves to its unique legislative rhythm. This often results in mis-steps, delays and a crescendo of costs that do little but fuel frustration and inefficiency.

In Project Nexus and Project mBridge, two public sector-led cross-border payment experiments using the latest technology, the lack of an interoperability regulatory framework is cited as a key obstacle for large-scale implementation in real life, which proves that technology alone cannot solve every problem. Project Dynamo, which explored the use of stablecoins/digital tokens in trade finance, also highlighted that regulatory clarity and harmonization across jurisdictions (specifically the regulatory frameworks for stablecoins and utility tokens) are vital to facilitate the use of such tokens globally, as trade and payments are global by nature.

Roadblocks to global regulation

At the heart of these challenges are regulatory frictions. Each nation’s unique regulatory environment dictates strict rules on sending and receiving money, creating a fragmented global landscape. While the economy is becoming increasingly global, regulations remain local. The main regulatory frictions hindering efficient and inclusive cross-border payments include diverging regulatory frameworks, anti-money laundering compliance complexities, restrictive data regulations, and inadequate access for non-bank players. Financial institutions and payment providers must navigate this maze, which often slows down transactions, increases costs and complicates processes. These regulatory frictions are the sand in the gears of what should be a well-oiled machine, causing transaction delays, unpredicted fees, and a lack of transparency that can sour relationships and upend financial forecasts.


Imagine a world where transferring money overseas is as simple as a local transaction. This vision can transition from a dream to reality by addressing the heart of the matter: the fragmented quilt of international regulations that more often throttles rather than facilitates. We invite you to explore our Forum paper: Unlocking Interoperability: Overcoming Regulatory Frictions in Cross-border Payments. This paper is a product of public and private collaboration across many jurisdictions and different players in the payments space. It attempts to propose some recommendations in terms of how to address regulatory frictions around cross-border payments:

1. Make cross-border payment interoperability a key domestic objective

By promoting cross-border interoperability at domestic level, we advocate for a seamless financial ecosystem where transactions don’t just occur within silos, but are part of a globally acknowledged framework. This strategic alignment across nations will mitigate risks, reduce costs and enhance the overall efficiency of cross-border payments.

2. Advocate for a strengthened global regulatory collaboration

Global challenges need global solutions. Establishing robust international dialogue and cooperative policy-making frameworks will pave the way for more synchronized financial regulations. Shared innovative spaces can spark collaborative solutions, leading to more secure transactions.

3. Push for the modernization of international payment regulations

The digital age demands digital solutions. Traditional regulatory frameworks must evolve to accommodate the rapidly changing financial landscape. By adopting an agile governance approach that considers various approaches, we can foster a regulatory environment where systems evolve fast with the technology advancement and market change.

4. Champion collaborations between public and private sectors

Collaboration is the key to innovation. By leveraging the collective expertise of policy-makers, industry pioneers, and payment providers, we can craft comprehensive strategies that reflect the complex realities of the global financial ecosystem. United in vision, we can navigate the complexities of international financial regulations, driving forward a future where cross-border payment processes are both efficient and equitable.

In this intricate environment, “suptech” and “regtech” emerge as invaluable tools. These technologies can help solve some issues regarding regulatory challenges. While suptech offers regulators enhanced oversight with real-time monitoring, regtech aids businesses in ensuring swift and accurate compliance. Together, they provide a promising solution to the longstanding challenges of regulatory frictions in cross-border payments, melding innovation with the rigors of international finance protocols.

The path to optimizing cross-border payments is complex, requiring concerted effort and alignment among diverse global actors. As the world becomes increasingly interconnected, the urgency to reform and standardize the regulatory landscapes of international financial transfers escalates. Regulators and policy-makers need to collectively champion regulatory coordination to support a financial infrastructure that is resilient, transparent and facilitative of broader economic objectives.

This endeavour is not solely about enhancing financial transactions; it is about reinforcing the pillars of global cooperation, facilitating economic access and driving collective growth in the global marketplace. The World Economic Forum recognizes the imperative of this mission, advocating for strategic alliances and pioneering discussions that will shape the future of cross-border financial interactions.

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