Everything You Need to Know About Cross-Border Payments

Despite recent improvements, cross-border payments still suffer from some friction: 

High costs and complexity

Cross-border payment fees often include foreign transaction fees, interchange fees, taxes, and foreign exchange margins. These costs are often significantly higher than domestic equivalents, with some corridors far exceeding the FSB’s 1 percent target. 

A quarter of payment corridors now average over 3 percent in fees, and global retail remittances for small-value transfers still average around 6 percent. In some cases, cross-border transactions can cost up to 10 times more than domestic ones, making international payments particularly expensive for low-value users.

It can also be difficult to predict settlement times on cross-border payments and reconcile multiple currencies for revenue accounting. Fluctuating exchange rates can be confusing for end consumers and may deter purchases. 

Limited transparency

A common complaint with cross-border payments is a lack of transparency. Once a payment is initiated, senders and recipients have no way to track it in real time. This visibility issue includes not only the status of payments in transit but also the total cost and final amount the beneficiary will receive.

Additionally, different fees and foreign exchange rates may apply at each step of the process, and many banks do not disclose these costs up front. Just over half of payment services provide information about cost and speed to end users. This lack of clarity can leave consumers and businesses alike with unexpected charges or delays.

Improving transparency is a key regulatory priority. The G20 and FSB have made it a critical component of their roadmap for enhancing cross-border transactions, in the interest of providing customers with timely and accurate payment information. 

Fragmentation of standards and networks

Cross-border transactions run on a patchwork of systems and formats. Data fields, messaging standards, and legal requirements vary by country and by rail. 

For example, some legacy formats only support Latin characters or limited address fields, forcing manual translation of payment details for certain corridors. Different networks — including SWIFT, ACH, CLS for foreign exchange (FX), and local instant payment rails — are not natively interoperable.

This fragmentation means banks must often perform extra processing, converting and mapping data at each hop. The result is inefficiency and higher overhead for international transfers. 

Regulatory requirements

Cross-border payments are subject to a wide range of regional, national, and transaction-specific regulations, each with its own implications for data protection, fraud protection, and compliance. These include:

• Regional regulations, such as the Asia-Pacific Economic Cooperation’s Cross-Border Privacy Rules (CBPR), which facilitate international data transfers and privacy protection among participating economies, and Europe’s Payment Services Directive 2 (PSD2) — soon to be PSD3 — which aims to enhance security, innovation, and competition in the payments industry while promoting consumer rights
• National regulations, such as Germany’s Bundesdatenschutzgesetz (BDSG), which governs the handling and protection of personal data within the country, and France’s Commission nationale de l’informatique et des libertés (CNIL), which enforces the General Data Protection Regulation (GDPR) with local interpretation and authority
• Transaction-specific regulations, such as the Payment Card Industry Data Security Standard (PCI DSS), which are a set of policies and procedures designed to promote credit card payments security

In addition to data governance, cross-border payments must satisfy multiple countries’ AML, CFT, sanctions, and tax requirements. These rules vary by jurisdiction, and each intermediary in a cross-border transaction may apply its own screening. These repeated checks, driven by uneven international standards, increase compliance complexity and processing delays. 

The cost of compliance grows as global regulators strengthen KYC and AML protocols. Banks and PSPs must deploy sophisticated screening and reporting tools to prevent fraud and ensure regulatory adherence. Missing or inconsistent data can trigger transaction rejections, and the need to pre-fund correspondent accounts further ties up liquidity and slows down payment flows.

Interoperability gaps

New technologies and networks struggle to connect without common architectures. 

For example, linking emerging faster payment systems across borders requires standard interfaces and legal frameworks. The Bank for International Settlements (BIS) Innovation Hub’s Project Mandala highlights how a modular design can prevent fragmentation by enabling interoperability among varied systems.

Many regional or bilateral arrangements exist, such as the UK’s Faster Payments System linking some eurozone rails, but a truly seamless global grid is still in development. Lack of interoperability forces banks into siloed corridors or slow fall-back options. 

Each of these challenges is interrelated. Overall, cross-border transactions remain slower, costlier, and less predictable than domestic ones. Addressing these challenges requires improving infrastructure, standardization, and cooperation across jurisdictions.

What are some emerging trends in cross-border transactions?

Several industry and regulatory trends shape the path forward:

ISO 20022 migration

Major global payment networks are shifting to ISO 20022. This richer, XML-based format can carry more remittance and regulatory data than older MT or ACH messages. 

The BIS Committee on Payments and Market Infrastructures (CPMI) defined harmonized ISO 20222 data requirements for cross-border transactions. These fields and formats aim to ensure that banks worldwide use consistent data profiles. The BIS plans to maintain these standards through at least 2027 and fosters global market practice groups to align faster payment messages to ISO 20022.

By 2027, nearly all Swift cross-border payments will use ISO 20022, with accompanying guidelines to ensure interoperability. This harmonization should reduce data errors and enhance straight-through processing in the years ahead.

Expansion of real-time capabilities

The success of domestic instant payment systems is driving efforts to link them internationally. 

In many countries, clearing and settlement systems now operate 24/7. The BIS Innovation Hub’s Project Nexus is designing a global connector so domestic instant systems can plug into one network. 

A proof of concept (POC) linked the Eurosystem’s TIPS to Malaysia’s Financial Process Exchange (FPX) and Singapore’s PayNow, and later extended to Indonesia, Malaysia, the Philippines, Singapore, and Thailand. In theory, this proof of concept allows for end-to-end settlement of cross-border payments in less than 60 seconds. 

Similar bilateral initiatives, such as the Thailand-Singapore PromptPay to PayNow linkage, permit immediate mobile transfers by phone number. 

In summary, the global payments industry is pushing real-time corridors, aiming for “anywhere, anytime” settlement, which echoes domestic instant payment expectations.

Regulatory harmony

Global authorities are working to align rules impacting cross-border payments to make it easier for payment messages to travel freely while meeting security objectives. 

In early 2025, the FSB established a Cross-Border Payments Data Forum to address discrepancies in data regulations across different regions. This forum advises countries to provide clear guidance on the Financial Action Task Force’s AML data requirements so banks face fewer uncertainties. The goal is to reduce friction between diverse privacy, sanctions, and AML frameworks. 

Related efforts include standardized sanctions list formats and wider adoption of global identifiers such as Legal Entity Identifiers (LEIs) for counterparties to reduce false positives. 

Demand for transparency

Customers increasingly expect visibility into cross-border fees and timing.

As part of the G20 roadmap, regulators have targeted 100 percent of total cost to end users and payment tracking information to create so-called ‘end-to-end’ transparency. 

Data from recent years shows some progress. For retail payments, the share of services disclosing both cost and speed rose to about 56 percent globally in 2024. Corporate transfers saw similar gains in fee transparency. On-the-ground innovations have also emerged, such as open APIs and tracking portals that enable businesses to monitor payments’ journeys. 

Continued momentum reflects the global push for better information, with more banks now publishing online price calculators for cross-border transfers and multilateral initiatives such as SWIFT gpi and ISO 20022 providing end-to-end status updates. 

What innovations are shaping cross-border transactions?

New technologies and models are poised to transform the cross-border space, including:

CBDCs and DLT platforms

Several central banks are exploring wholesale and retail CBDCs to improve cross-border settlements.

Project mBridge — originally developed in collaboration with the BIS innovation Hub and the central banks of China, Hong Kong, Thailand, and the UAE — built a multi-CBDC blockchain platform that reached a minimum-viable product by 2024. The BIS stepped back from the project at that point, handing stewardship to the participating central banks, which have continued to extend its use. The platform enables instant cross-border payments and FX transactions settled directly in CBDC tokens. Commercial bank activity continues to expand.

Similarly, Project Dunbar developed prototypes on distributed ledgers for a shared multi-currency settlement platform. 

These trials show that banks can transact directly in multiple digital currencies on a common infrastructure, potentially slashing settlement layers. The core idea is that tokenized central bank money on ledgers can bypass traditional correspondent chains, making payments faster, cheaper, and final. 

These experiments point to a future where authorized blockchain networks regularly handle real-time cross-border payments. 

Blockchain and distributed ledger models

Beyond central bank tokens, private sector innovations are also in play. For instance, global cross-border payment platforms built on permissioned blockchains can enable near-instant FX. 

The Dunbar project emphasizes how smart contracts and CBDCs can form a programmable cross-border infrastructure. Other industry consortia, such as Project Jasper-Ubin and Fnality, are prototyping ledger-based wholesale rails for cross-border cash or tokenized securities.

While many of these remain experimental, they exemplify the push towards decentralized architectures that can settle cross-border transactions without multiple intermediaries.

API standardization and open connectivity

Financial institutions and payment systems are using open APIs to exchange payment data more frequently, with initiatives underway to harmonize application programming interface (API) design so cross-border requests and confirmations flow seamlessly. The BIS CPMI has convened the API Panel of Experts (APEX) to develop best practices. 

APIs can improve efficiency in payment initiation, status tracking, and reconciliation. For example, the BIS published ISO 20022 message and API specifications under the Project Nexus blueprint to ensure all participants can plug into the network.

Standards bodies also promote RESTful APIs for FX instructions, account lookups, and batch transfers that align across borders. Standardized APIs would make it so that a corporate treasury system could ‘dial into’ foreign payment gateways directly, reducing manual file exchanges. 

As more countries adopt ISO 20022, an increasing share of cross-border traffic will use API interfaces that adhere to those global data standards, further enhancing connectivity.

Multi-currency settlement platforms

The concept of a shared settlement platform for multiple currencies — one that allows transactions to settle without repeated conversions — has moved from theory to active experimentation. Projects such as mBridge and Dunbar demonstrate the viability of DLT-based multi-currency settlement in practice, with mBridge in particular having processed real-value transactions across multiple jurisdictions at scale. 

In a regional context, blockchain-linked local currency platforms continue to emerge, including Project Inthanon-LionRock, which eventually evolved into mBridge. 

Outside blockchain, some proposals call for FX nets using real-time tokenized cash reserves. The hope is to reduce FX legs and to allow payments to be ‘native’ on a common platform. 

These innovations are promising but face hurdles, including governance, interoperability, and legal frameworks. Still, they demonstrate how cross-border payments could evolve beyond the old correspondent model.

What are different regional perspectives pertaining to cross-border transactions?

Regional perspectives include:

Europe

Europe’s SEPA is often cited as a success story in cross-border integration. 

SEPA treats euro payments throughout its 38-country zone — which covers both EU members and select non-EU nations — as domestic payments. SEPA has eliminated the traditional distinction between national and cross-border euro payments using harmonized standards, which include:

• Uniform International Bank Account Numbers (IBANs)
• Common credit transfer and direct debit schemes
• The euro as a single currency

This has yielded very low fees and same-day settlement for pan-European transfers at near-domestic speed. 

SEPA Instant Credit Transfers (SCT Inst) via the TIPS settlement system extends this to 24/7 real-time settlement across Europe. 

Europe proves that a shared currency and regulations can reduce cross-border friction. Despite challenges such as non-Euro currencies and a post-Brexit UK, efforts such as linking the UK’s Faster Payments system to EU rails are in progress. European banks are also leading interlinking projects. 

Asia-Pacific

APAC is highly diverse, with many currencies and payment systems. A common theme is rapid domestic innovation with growing cross-border links. For example, several Southeast Asian countries have launched instant payment schemes, including Singapore’s PayNow, Thailand’s PromptPay, and Malaysia’s DuitNow. 

In late 2023, Thailand and Singapore became the first to directly connect their instant payment networks. A Thai user can send baht or SGD instantly to a Singaporean account (and vice versa) using a mobile number. This landmark linkage provides a blueprint for extending real-time rails across borders. 

Other APAC efforts include Singapore’s Project Ubin, which led to the Dunbar prototype, and Hong Kong-China links. China’s cross-border interbank payment system (CIPS) operates globally for RMB clearing, and SWIFT has a memorandum of understanding (MOU) to interconnect with CIPS. 

Moreover, Nexus is explicitly expanding across the Association of Southeast Asian Nations (ASEAN) and beyond. Indonesia, the Philippines, and others are working on connecting their instant payment systems to the Nexus hub.

APAC is at the forefront of faster payment and CBDC pilots. The region’s large corridors, which include CNY–USD, USD–JPY and CNY–EUR, remain heavily correspondent-based, but local rails and policies are beginning to shape alternative paths. 

For instance, India’s real-time payments (RTP) system, Unified Payments Interface (UPI), is exploring cross-border use with partners such as the United Arab Emirates. Australia’s new instant system, the Reserve Bank of Australia’s (RBA) New Payments Platform (NPP), can potentially link to others. 

While fragmentation remains a challenge, APAC shows leadership in deploying new real-time infrastructure and experimenting with cross-border interlinkage.

Africa

The African Union and Afreximbank have launched the Pan-African Payment and Settlement System (PAPSS) to enable local currency real-time gross settlement (RTGS) across the continent. 

PAPSS, which launched in January 2022, connects African central banks and payment systems, so traders can pay in their respective local currencies. This ambitious scheme is meant to complement the African Continental Free Trade Area. 

In practice, it is still being rolled out country by country but offers a unified infrastructure in a region of otherwise fragmented FX arrangements. By facilitating intra-African transfers without multiple intermediaries, PAPSS aims to shorten settlement times and reduce costs on important new corridors, including Nigeria–Kenya and Ghana–South Africa.

The Americas

In North America, banks typically use large-value systems — specifically, the Fedwire Funds Service, the Clearing House Interbank Payment System (CHIPS), Lynx, and SWIFT — for cross-border flows. 

There is no single regional scheme akin to SEPA, but improvements continue. For example, the Federal Reserve has modernized Fedwire and established the FedNow Service for domestic use, and Canada operates Lynx 24/7. Industry work is ongoing, linking RTP channels and improving remittance rails to Latin America. 

In Latin America and the Caribbean, cross-border transactions often rely on US dollar chains or local clearing houses. For example, Banco do Brazil’s instant payment ecosystem, Pix, links with Southern Common Market (Mercosur) partners. Some countries, including Brazil, Mexico, and Colombia, are discussing RTP linkage, but progress varies. 

Overall, the Americas reflect a mixture of legacy high-value corridors and nascent fintech solutions and continue to focus on remittances corridors, including U.S.–Mexico and U.S.–Latin America, for speed and cost reduction.

Bilateral initiatives sometimes create ‘fast lanes’ in key corridors.

For instance, Singapore is an observer in Project Nexus and has frameworks linking PayNow to other countries’ systems. As a major financial hub, the UK is exploring connections between its Faster Payments System and European rails. 

Leading global banks have built payment utilities, such as SWIFT gpi, to improve execution across any corridor. Each corridor has its mix of rails and liquidity patterns, and the path to innovation may differ by region and currency. Local regulations and bilateral agreements influence the speed at which new services are introduced.

What does the future hold for cross-border transactions?

The journey toward truly frictionless cross-border payments will require continued collaboration and innovation. The technical building blocks, including common data standards, linked rails and interoperability networks, and emerging regulatory cooperation are all part of the blueprint for progress. 

Central banks’ CBDC pilots and fintech platforms show how direct ledger-based settlement can greatly speed up cross-border flows, though adoption will require new legal and governance frameworks. At the same time, improvements to existing infrastructure — including Swift enhancements, global API networks, and expanded operating hours — can yield gains in the near term. 

Looking ahead, the goal is to meet G20 targets. Achieving these goals means reducing reliance on multiple correspondents, removing overnight delays, and giving customers clear pricing. 

Continued efforts such as the FSB’s cross-border payments forum, the BIS CPMI market practice groups, and public–private task forces will drive alignment of standards and regulations. Ultimately, the end goal is more inclusive and efficient global payments — a landscape where sending money across borders is as easy and affordable as sending it across town.