Cross-Border Payment Technologies: Innovations and Challenges

Cross-border payments (XBPs), particularly remittances and retail transactions, remain more costly, slower, less accessible, and less transparent than domestic payments. The continued inefficient XBP arrangements, in contrast to the progress made for domestic payments with the use of new technologies and innovative models, reflect that private actors alone cannot overcome the many market failures that hinder XBPs. The most binding constraint concerns limited interoperability, which relates to the multisided market frictions in XBPs and the institutional differences between countries. Ultimately, only proactive and collaborative efforts by the public sector can overcome this constraint. Key priorities are therefore greater harmonization of standards, especially for message transmission, more effective compliance regimes, and promotion of competition.