Global: G20 Streamlines Cross-Border Payments Roadmap with Updated Priorities

In 2020, the G20 leaders endorsed a roadmap aimed at enhancing cross-border payment experiences and infrastructure. As we approach the halfway mark of the anticipated timeline to make cross-border payments cheaper, faster, and more accessible by 2027, the G20 has consolidated its original five focus areas into three.

The revised priorities for the next phase of the G20’s cross-border roadmap are:

1. Payment System Interoperability and Extension
2. Legal and Regulatory Supervisory Frameworks
3. Data Exchange and Messaging Standards

Cross-border payments, crucial for international trade, have historically faced challenges due to disconnected systems, various stakeholders, and isolated regulatory programs. However, the demand for interoperability and seamless payment capabilities has grown, particularly among business customers expanding internationally.

By 2027, the G20 aims for 75% of cross-border payments to be credited to beneficiaries within an hour. Despite the complex landscape in 2024, marked by diverse tax codes, compliance requirements, and involved parties, advancements in international payments infrastructure are paving the way for achieving these goals.

Data and Cross-Border Payments: Efficient messaging is crucial for cross-border payments’ straight-through processing. Standardized messaging helps eliminate manual steps, reducing the risk of failures and speeding up reconciliation. The adoption of ISO 20022 has been significant, enhancing data exchange and messaging standards. However, achieving maximum efficiencies requires widespread industry adoption.

The Bank of International Settlements emphasizes the importance of aligning with ISO 20022 data requirements by the end of 2027. The U.S. is set to migrate to ISO 20022 in April 2024 (CHIPS) and March 2025 (Fedwire).

Global Payments, Local Regulation: Regulatory divergence poses a major challenge for cross-border payments. Collaboration between the private and public sectors is vital to overcoming hurdles related to anti-money laundering (AML), countering financing of terrorism (CFT), and data governance controls. API standardization can mitigate payment system fragmentation, supporting the evolution of digital and platform-based business models.

As businesses increasingly focus on faster payments and interoperability, solving cross-border payment challenges becomes essential for supporting global economic growth. The G20’s efforts to streamline the cross-border payments roadmap underscore the commitment to adapting to changing dynamics and technological advancements in the financial sector.