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The Financial Stability Board (FSB) has issued a call for intensified global efforts to improve cross-border payments, emphasising the need for more effective collaboration across both public and private sectors.
The FSB has highlighted that further work is necessary to improve cross-border payments.
Although more than half of the priority actions have been completed, the board has said that “the work done so far is not yet sufficient and that further efforts are needed to meet the quantitative targets”.
The FSB’s reports include a consolidated 2024 progress update on the G20 Roadmap for Enhancing Cross-Border Payments, a detailed assessment of the adoption of the Legal Entity Identifier (LEI) and an annual review of user experience targets.
Limited achievements all round
Both the cost and speed of cross-border payments have delivered minimal milestones, the reports reveal, with disappointing findings for both and across different segments.
The FSB’s reports include updates revealing that the speed of wholesale cross-border payments has slightly declined, with the share of Swift payments credited within one hour and one business day dropping to 50.6 percent and 92 percent respectively, with the Middle East region showing the most significant improvements in processing times, but Africa lagging behind.
However, access to wholesale cross-border payments remains steady at 92.4 percent, with no change in the availability of options for sending or receiving funds.
In the retail segment, there have been no improvements to cost, with all use cases exceeding the target cost of 1 percent.
The cost of person-to-business (P2B) payments slightly reduced in Latin America and South Asia, but the Sub-Saharan Africa and South Asia regions remained the furthest from cost targets.
The speed of retail payments has also declined, with fewer payments settling within one hour or one business day compared with 2023.
Access improvements were noted in Asia-Pacific, particularly for middle-income jurisdictions, while transparency on cost and speed has increased modestly.
For remittances, the cost of sending $200 has risen slightly, with Sub-Saharan Africa remaining the most expensive region.
Mobile money, meanwhile, has been surpassed by payment cards as the most cost-effective funding method, and the speed of remittances remains largely unchanged, although Sub-Saharan Africa has seen an improvement in funds credited within one hour.
Transparency in fee and FX margin breakdowns has nearly reached full compliance, increasing to 99 percent.
Limited progress
International efforts have meant that some milestones have been achieved, including the harmonisation of ISO 20022 data standards and the extension of payment systems' operating hours, as well as increased collaboration on the use of application programming interfaces (APIs) and the interlinking of fast payment systems (FPS).
But challenges persist, despite these advances.
For example, friction points related to managing payment data and becoming a payments service provider remain unresolved, with the FSB saying that recommendations on these issues should be expected by December 2024.
Meanwhile, there has been a growing adoption of the LEI, a key tool for enhancing transparency in financial transactions, in financial market use cases such as over-the-counter (OTC) derivatives and securities markets, but its use in cross-border payments lags.
“Broader adoption of the LEI remains a challenge,” the FSB conceded in its report.
The report found that national authorities have increased efforts to promote the use of the LEI through bulk registration initiatives, as has been the case with India, as well as awareness campaigns and regulatory mandates.
For example, China’s 2020 financial sector strategy requires LEIs for all financial transactions, while the UK will mandate LEIs for CHAPS payments from May 2025.
The FSB credits these regulatory moves with driving LEI adoption, with Asia seeing a nearly 90 percent increase in active LEIs since 2019.
Europe, meanwhile, leads globally, holding 66 percent of active LEIs due to EU requirements for securities transactions, and since 2019 the number of global LEIs has risen 84 percent, with more than 2.6m active LEIs.
However, slow adoption persists elsewhere due to factors such as high costs, especially in low-income regions, and a lack of perceived incentives have hindered widespread adoption, according to the FSB.
Some jurisdictions have made minimal progress on FSB recommendations, leading the board to stress the need for timely implementation.
To help with this, the FSB has provided additional guidance to oversight authorities and standard-setting bodies to overcome barriers and accelerate global LEI adoption.
More to be done
The FSB warned that although more than half of the G20 Roadmap’s planned actions have been completed, achieving the G20’s ambitious targets for faster, cheaper, more transparent and inclusive cross-border payments by 2027 will require intensified efforts from stakeholders.
The organisation has urged continued commitment from a range of stakeholders, including domestic regulators and payment service providers.
