BASEL Switzerland—Faster payments have the potential to vastly improve cross-border payments, particularly across retail payments and remittances, according to a new analysis.
The Bank for International Settlements (BIS) said in a new report, titled “Linking fast payment systems across borders: considerations for governance and oversight,” that it is seeking comments on how those transactions can be made cheaper and more transparent, and specifically, how faster payment systems across the globe can more seamlessly interact with one another, Pynts.com reported.
The report was prepared by the BIS Committee on Payments and Market Infrastructures, as an interim report to the G20. The BIS is seeking comments by Dec. 13 of this year to help identify and address initial considerations for government and oversight of these faster payment systems, Pymnts.com reported.
‘Promising Solution’
The paper suggested that “Interlinking arrangements are one of the most promising solutions for enhancing cross-border payments. So far they remain relatively untapped.”
In terms of functionality, the G20 has said that interlinking of fast payment systems (FPS), with their real-time and 24/7 operational capabilities remains among “priority actions” to help improve cross-border payments and remittances by 2027, Pymnts.com said.
According to the BIS, to get there interlinking arrangements will “allow payment service providers (PSPs) of different jurisdictions participating in different payment systems to transact with one another as if they were participants in the same system. Cross-border payments processed via the interlinked FPS can be completed within seconds or at most minutes.”
‘Especially Challenging’
But, elsewhere in the document, the BIS added that “practitioners and authorities involved in FPS interlinking have noted that agreeing on workable governance and oversight arrangements can be especially challenging (relative to, for example, the operational and technical challenges) due to the multi-jurisdictional, cross-border and/or cross-currency nature of these arrangements.”
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