Independent Banker - April 2021 - 37

and PYMNTS.com. Consumers have
already shown a strong use of instant
payments, with 42% indicating they
had received at least one instant
disbursement in 2019, up from 11%
in 2017, according to PYMNTS.com.
A global effort
With rising interest in real-time
payments, the need for faster
cross-border transactions may be
reaching a tipping point. The current
correspondent banking model, which
involves a series of intermediaries
and transitions of the payment, can
be slow and create a clunky customer
experience. In today's landscape,
consumers and businesses seek
more streamlined encounters. This
means they increasingly have turned
to nonbank payment providers to
facilitate global transactions.
In fact, 83% of companies report
having made cross-border payments
in 2019, according to a Levvel
Research study commissioned by
Tipalti, a global payables automation
solutions provider based in San
Mateo, Calif. While wires still lead
global transactions at 69%, PayPal
payments came in second, accounting
for 38% of the total.
Beyond demand, the correspondent
banking model itself may be reaching
a breaking point. While global
transactions grow, the number of
correspondent banks has been on
the decline (see Snapshot, right). The
rise in global payment transactions,
combined with the deterioration of
available institutions to process them,
creates a bottleneck that has the
potential to increase friction.
To address these issues, the
Financial Stability Board (FSB),
Committee on Payments and Market
Infrastructures (CPMI) and other
global organizations worked together
to issue a three-stage roadmap that
outlines a path to address global
Snapshot:
Demand for instant
global payments
The incr 5%
ease in value of
cross-border payments
between 2011 and 2020.
Meanwhile, volume
increased 4% over
that period1
22%
fewer correspondent banks
existed in 2020 compared
with 20111
countries mor6 e than
doubled their year-toyear
volume of real-time
payments transactions in
2019, including Australia,
India and the Philippines2
$35 trillion
The estimated value of B2B
cross-border payments
in 20221
9.3%
of estimated B2B crossborder
payments volume
will be instant payments
in 20221
1) Association for Financial Professionals Payments
Guide, 2020 2) FIS 2020 Flavors of Fast report
payments challenges, including the
imperative for faster payments. An
opinion editorial published in the
Financial Times by CPMI chair Jon
Cunliffe signaled the group's focus on
moving global payments at a faster
rate: " It can still take as long as 10
days to transfer money to different
jurisdictions. ... For decades, they
have been the forgotten corner of the
global financial plumbing ... Fixing the
plumbing matters. " In the U.S., the
Federal Reserve has committed to this
initiative and to " assessing potential
opportunities and implications for the
United States and the industry. "
In lockstep with these initiatives
comes the rise of global real-time
payments systems with the potential
for interoperability. The number of
countries with real-time payments
networks is now 56, up from 14 in
2014, and each of these systems has
been built with global payments as
a chief consideration, according to a
recent FIS report.
" The real-time platforms that have
been established around the globe
are all being built on the de facto
global standard ISO 20022, " Quibria
says. " The different markets have
made a concerted effort to mitigate
localization. "
Domestic instant
payments initiatives
For its part, when the U.S. began
exploring its own real-time systems,
the Faster Payments Task Force
ranked global interoperability
as a chief factor in establishing
the instant infrastructure. The
task force's effectiveness criteria,
originally published in January 2016,
specifically pointed to " better choices
for U.S. consumers and businesses to
send and receive convenient, costeffective
and timely cross-border
payments " as a desired outcome.
Yet, at this stage, the Federal
independentbanker.org Q 37
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