In an era defined by digital transformation, cross-border payments are undergoing a profound evolution. Despite geopolitical shifts and economic fragmentation, international money transfers are growing at a projected rate of 5% annually through 2027. This surge is fueled not only by expanding global trade but also by financial inclusion—millions previously unbanked now gaining access to digital financial tools.
Yet while domestic payments have embraced instant processing, cross-border transactions still face delays, complexity, and high costs. Bridging this gap requires more than incremental improvements—it demands reimagining the global payments infrastructure from the ground up.
How Cross-Border Payments Work Today
At the heart of today’s international payment system lies a network of banks connected through direct relationships or intermediaries known as correspondent banks. When Bank A in one country needs to send funds to Bank B abroad, it relies on a secure messaging protocol—most commonly provided by Swift—to transmit payment instructions.
If both banks maintain accounts with each other (a "nostro" and "vostro" arrangement), the transfer is straightforward. But when no direct link exists, multiple intermediaries may be involved, each adding time and cost. Historically, these multi-tiered chains caused significant delays.
However, modern advancements have streamlined much of this process. According to Thierry Chilosi, Chief Strategy Officer at Swift, 84% of cross-border payments now involve either a direct link or just one intermediary. Furthermore, 89% of Swift transactions reach the recipient bank within an hour, and half are credited to the beneficiary’s account in under five minutes.
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Despite these gains, challenges remain—especially on the front-end user experience. Many businesses still struggle with opaque tracking, unexpected fees, and manual reconciliation processes.
The Push for Real-Time Cross-Border Payments
Real-time payment (RTP) systems are already transforming domestic finance. Countries like the U.S. (via FedNow), India (UPI), and Singapore (PayNow) offer 24/7 instant transfers between local accounts. These systems boost efficiency, reduce float, and enhance cash flow predictability.
Extending this capability across borders is the next frontier. Some progress has been made: Singapore has linked PayNow with India’s UPI, Thailand’s PromptPay, and Malaysia’s DuitNow—enabling near-instant remittances for individuals.
But scaling this model globally is complex. It requires:
- Technical alignment between central bank-operated systems
- Harmonized data standards
- Unified regulatory frameworks
- Bilateral trust and cooperation
As Pawel Szejko, CFO of online brokerage XTB, notes:
“It’s easier to build something for a few countries than to build the infrastructure and the setup for the whole world.”
While regional integrations will continue, a universal solution remains distant—unless new technologies step in.
Blockchain: A Catalyst for Global Payment Transformation
Blockchain technology holds the potential to leapfrog traditional infrastructure, enabling near-instant settlement across borders regardless of geography or time zones.
Unlike conventional banking ledgers—where each institution maintains its own records—blockchain operates on a shared, distributed ledger. Every transaction is verified across a decentralized network, eliminating the need for reconciliation and reducing settlement times from days to minutes.
Financial institutions are increasingly turning to private, permissioned blockchains, where access is controlled and participants are vetted. This model offers several advantages:
- Always-on operation: Transactions can occur anytime—weekends, holidays, off-hours.
- Enhanced security: Immutable records prevent tampering; no single point of failure.
- Smart contracts: Self-executing code that automates payments when predefined conditions are met (e.g., delivery confirmation).
- Interoperability with CBDCs: Central Bank Digital Currencies can be natively integrated into blockchain rails.
J.P. Morgan’s blockchain division, in collaboration with the Monetary Authority of Singapore and Banque de France, successfully tested cross-border settlements using digital Singapore dollars and euros (CBDCs) on a permissioned network—proving technical feasibility.
Jason Clinton, Head of Financial Institution Group Sales Europe at J.P. Morgan, emphasizes:
“Ultimately, where we want to get to is the ability to instantly settle any payment in any currency, anywhere, any time—and that will probably require using blockchain technology.”
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Pre-Validating Payments: Reducing Friction with Blockchain Data Networks
One major cause of failed or delayed cross-border payments? Simple human error—incorrect IBANs, wrong BIC codes, mistyped beneficiary details.
According to LexisNexis, up to 50% of failed payments stem from data entry issues. Resolving them often involves time-consuming back-and-forth between banks.
Blockchain can help here—not just for moving money, but for securely sharing data. A permissioned blockchain network allows financial institutions to pre-validate beneficiary information before initiating a transfer.
Because blockchain records are immutable and auditable:
- Institutions can verify account details in real time
- Access logs show who viewed or updated data
- Fraudulent alterations are instantly detectable
Sushil Raja, General Manager of J.P. Morgan ChaseNet®, explains:
“Collaboration amongst financial industry participants is necessary to unlock the power of collective intelligence.”
A secure, shared data layer could dramatically improve payment success rates—without compromising privacy.
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Customer Experience: The Missing Link in Payment Innovation
Technology alone isn’t enough. Even with faster rails and smarter systems, poor customer service undermines trust.
Frances Cavanagh of global insurer WTW highlights a common pain point:
“A lot of time is spent chasing transactions that somebody is claiming they’ve not received.”
Many banks still lack real-time tracking portals. Businesses want transparency—not just final status updates, but end-to-end visibility.
Bank Negara Indonesia (BNI) addressed this with BNI Direct, a digital portal offering:
- Real-time payment status tracking
- Automated notifications
- Country-specific documentation requirements
Rian Kaslan of BNI puts it bluntly:
“Gone are the days where businesses want to call someone. If they don’t get instant updates and notifications, it’s already considered a lack of service.”
The lesson? Start with the customer experience—and let technology follow.
Frequently Asked Questions (FAQ)
Q: What are cross-border payments?
A: Cross-border payments refer to money transfers between individuals or organizations in different countries. They typically involve multiple banks, currencies, and regulatory environments.
Q: Why aren’t international payments instant yet?
A: Legacy systems rely on correspondent banking networks and batch processing. Differences in time zones, regulations, and technical standards also slow down settlement.
Q: Can blockchain replace SWIFT?
A: Not immediately. While blockchain offers faster settlement and automation via smart contracts, it complements rather than replaces existing systems. Interoperability and regulation remain key hurdles.
Q: What is a permissioned blockchain?
A: A private blockchain where participation is restricted to authorized entities. It provides control over data access and governance—ideal for financial institutions seeking security and compliance.
Q: How do CBDCs work with blockchain?
A: Central Bank Digital Currencies (CBDCs) can be issued on blockchain networks, enabling programmable money that supports instant cross-border settlement and automated compliance.
Q: Are real-time cross-border payments possible today?
A: Limited implementations exist (e.g., Singapore-UPI linkage), but widespread adoption requires deeper integration between national payment systems and broader regulatory alignment.
The Future Is On-Chain—but Evolution Comes First
While the vision of universal instant settlement looms large, the reality is gradual evolution. In the short term, blockchain will augment—not replace—current systems.
Key applications include:
- Pre-validation of payment data
- Secure interbank information sharing
- CBDC-enabled settlements
- Automated workflows via smart contracts
Cooperation remains essential. Without standardization and cross-network compatibility, we risk replacing siloed banking systems with siloed blockchains.
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As Jason Clinton observes:
“Around 90% of central banks are exploring CBDCs—but blockchain won’t replace existing systems overnight.”
The path forward combines innovation with integration: better front-end experiences, smarter back-end rails, and collaborative frameworks that put users first.
In the race to rewire global finance, speed matters—but so does trust, transparency, and seamless service. The future of cross-border payments isn’t just faster—it’s smarter, safer, and more inclusive.