Cross-Border Payments: Recent Developments and Future Horizons
Cross-border payments, the financial lifelines enabling international trade, remittances, and global commerce, are having a moment.
In 2025, the market is expected to surpass $200 trillion annually, driven by e-commerce growth, migration, and digital globalization. Traditional systems, reliant on correspondent banking networks, have long been plagued by high costs (averaging 6.5% for remittances) slow settlement times, and opacity. However, recent innovations are addressing these pain points through technological advancements, regulatory collaborations, and infrastructure upgrades.
One of the most significant recent developments is the acceleration of instant and real-time cross-border payments via interlinked fast payment systems. Central banks and payment networks are forging bilateral and multilateral connections to bypass legacy rails. For instance, the European Central Bank's TARGET Instant Payment Settlement (TIPS) has expanded to support multi-currency instant settlements, including links with Sweden's krona and Denmark's krone, with plans for Norway. Globally, Project Nexus, led by the Bank for International Settlements (BIS), went live in early 2025, connecting fast payment systems from five central banks to enable seamless retail transfers. This initiative reduces transaction chains, cutting costs and times dramatically. In Asia, India's Unified Payments Interface (UPI) has been linked with Europe's TIPS, allowing real-time transfers between rupees and euros. Such linkages are not mere technical feats; they represent a shift toward inclusive finance.
"Our approach is that regional and global integration can go hand in hand through the interlinking of fast payment systems across regions and countries." He emphasized that this "open, multi-currency interlinking approach can lay the groundwork for cheaper, faster and more transparent cross-border payments – without compromising the integrity, stability or sovereignty of the countries involved."
Experts like Cipollone argue that these innovations could halve remittance costs by 2027, aligning with G20 targets for enhanced speed, access, and transparency.
Blockchain and distributed ledger technology (DLT) are another pillar of innovation, offering alternatives to traditional correspondent banking. In 2025, platforms like Partior, a blockchain-based network backed by JPMorgan, DBS, and Temasek, saw Deutsche Bank pioneer euro-denominated cross-border payments, enabling 24/7 settlements with reduced intermediaries. Similarly, fintechs such as Kima Network have deployed blockchain infrastructure for remittances, eliminating middlemen and enabling AED-to-multi-currency transfers in seconds. These solutions leverage smart contracts for automation and on-chain settlements, addressing volatility through stable mechanisms. A BCG study from September 2025 identifies "instant cross-border transactions" as a top trend, alongside agentic AI, noting that blockchain could reshape payments by tokenizing central bank money to bypass chains. Industry insights underscore the potential: "Cross-border payments are finally getting the overhaul that businesses have wanted for a decade," states a Fintechtris report, highlighting how DLT complements existing systems rather than replacing them.
“Cross-border payments are essential to global business and finance. But in my experience as a policymaker, there is a widely held complaint that cross-border payments are slow, costly, unreliable, or unsafe. I have heard this from large multinational corporations and representatives of small business, in advanced economies, emerging markets, and low-income countries alike.”
- Brent Neiman, Assistant Secretary for International Finance, US
Artificial intelligence (AI) and data analytics are infusing intelligence into cross-border flows, enhancing fraud detection, compliance, and personalization. In 2025, AI-driven platforms have reduced manual interventions, with JPMorgan reporting a 99.3% straight-through processing rate across 120 currencies. Tools like machine learning algorithms predict currency fluctuations and optimize routing, minimizing exposure in emerging corridors affected by geopolitical tensions. Fintechs such as Layerbankfi and Stronghold Pay are integrating AI with blockchain for low-cost, borderless transfers. A PwC report on Payments 2025 urges institutions to "reimagine ways to manage costs of cross-border payments at each step of the payment value chain," leveraging AI for efficiency. Experts warn of cyber risks, with 88% of organizations hit by payment fraud in recent years, costing trillions globally. "Cybertheft and fraud are major challenges," notes JPMorgan, advocating for AI-fortified resiliency.
Regulatory frameworks and public-private partnerships are catalyzing these innovations. The G20 Roadmap, now in its advanced phase, prioritizes interoperability, legal harmonization, and data standards like ISO 20022. Swift's September 2025 launch of a new retail payments scheme exemplifies this, connecting major banks for fast, predictable transfers akin to domestic ones. Javier Perez, Swift's CEO, stated: "This new scheme will make cross-border retail payments faster, cheaper, and more transparent for consumers and businesses."
"Swift's new scheme reflects the power of industry-wide collaboration to deliver meaningful change for cross-border payments. By committing to full transparency and predictability on cost and speed, we are collectively raising the bar for customer experience. It's a decisive step toward a more inclusive, efficient, and trusted global payments ecosystem, one that aligns with the G20 goals and meets the evolving expectations of individuals and businesses worldwide."
- Ole Matthiessen, Global Head of Cash Management & Head of Corporate Bank APAC MEA, Deutsche Bank
The IMF's February 2025 note on digital money estimates that such innovations could boost cross-border flows by reducing costs and enhancing speed, particularly in emerging markets. Finastra experts highlight "connecting immediate payment schemes" and "developing alternative rails to Swift" as key activities reshaping banking.
Despite progress, challenges persist: currency volatility, sanctions, and inclusion gaps in developing regions. Solutions like embedded finance and digital wallets are bridging these, with North America leading in adoption due to diverse economies. A World Economic Forum piece from May 2025 spotlights fintech's role in aiding MSMEs, noting that "innovative fintech is helping small business in cross-border trade" by lowering barriers.
“By fostering interoperability and prioritizing MSMEs’ needs, digital payment innovations can provide much-needed stability and inclusivity in an uncertain global economy. These advances ensure that cross-border commerce remains accessible and efficient for all participants, empowering MSMEs to drive economic growth, foster innovation and create a more equitable global trade landscape.”
- Sergio Navajas Senior Specialist, IDB Lab & Jimena Sotelo Lead, TradeTech, World Economic Forum
Looking ahead, 2025 appears to be a pivotal year, where words finally spur action. As Cipollone warns: "This is not a situation we can accept passively. We need continuous efforts to enhance cross-border payments." With projections of 5% annual growth in international transfers through 2027, innovations like CBDC pilots and AI-optimized corridors promise transformative benefits. Yet, experts stress balanced adoption to mitigate risks. As McKinsey envisions, by 2025, per-transaction pricing could erode significantly, fostering a more interconnected world.
Ultimately, these developments not only streamline market operations but offer greater global economic resilience, ensuring payments are as borderless as the digital age demands.