Voice of the Industry

As regional payment infrastructures proliferate, how do we prevent fragmentation?

Tuesday 28 March 2023 08:16 CET | Editor: Raluca Ochiana | Voice of the industry

Saskia Devolder, Strategic Programme Director Cross-border Payments at SWIFT: To connect payment systems worldwide, regulations need to be standardised and systems need to communicate effectively.



Over the past 50 years, we’ve seen steep and constant change in the way that money exchanges hands, from the advent of cash and credit card to new forms of digital currencies. Along the way, not all countries have innovated at the same rate, or in the same way. This brings us to today and a payments landscape that simultaneously brings the world together and gets more and more fragmented. 

It goes without saying that technological advances are vital to ushering in a new era of money. But to make this sustainable, we need to ensure that frameworks are in place so that these developments can support a global interconnected network of transactions. And this requires a global mindset. 

The state of play

In October 2020, the G20 endorsed an initiative to enhance cross-border payments across four key areas: cost, speed, access, and transparency. By coming together as an industry to address challenges in these areas, we can create more transparent and inclusive cross-border payment services that support economic growth, international trade, and financial inclusion. 

Significant progress has been made in bringing correspondent banking closer in line with these targets, and the work is still ongoing. Initiatives like Swift GPI and the emergence of new market entrants making the traditional banking landscape more competitive have made international payments faster and more transparent than ever.

In an ideal world, of course, cross-border payments would be as seamless as domestic ones. Given that they must pass through different jurisdictions, time zones, systems and currencies, this is an ambitious feat. But it’s a worthwhile goal, and it’s what corporates and individuals sending money abroad increasingly expect. Progress is definitely being made, and the emergence of regional payment systems is starting to close the gap between cross-border and domestic payments.

Regional payment infrastructures can take many forms, such as regional settlement systems, regional card schemes, and cross-border payment systems. Regional harmonisation is a significant step forward in the process of alignment between policies and regulations within a certain geography. Forging regional ties through integration and cooperation can eliminate obstacles to trade and make the region more competitive in the global marketplace. 

One of the most notable regional payment infrastructures is the European Union's (EU) Single Euro Payments Area (SEPA). SEPA is a payment system that allows individuals, businesses, and governments to make euro-denominated payments to any other SEPA country under the same conditions and fees as domestic payments. SEPA has significantly reduced cross-border payment costs and improved payment processing times, making it easier and cheaper for businesses to engage in cross-border trade.

Progress, but still not perfect

Despite the benefits of regional payment infrastructures, there are significant challenges in achieving and scaling them. One of the most significant is the lack of harmonisation in payment systems across different countries within a given region. Differences in payment systems, regulations, and currencies can hinder the development of regional payment infrastructures, making it challenging to facilitate cross-border transactions. To make progress, policies need to be implemented both on the national and the regional level.

The costs associated with the development of regional payment infrastructures can also be prohibitive, particularly for smaller countries. And trust and confidence in payment systems among individuals and businesses can be lacking within a region and not all payment habits are equal, not even in Europe. These factors can hinder the adoption of regional payment infrastructures, making it difficult to achieve the necessary scale to support cross-border transactions.

The real challenge, however, comes with ensuring that regional payment systems do not preclude interoperability within a wider, global payments network. The role that regulation plays in moving money across borders is a significant one and arguably the biggest challenge in linking different payment systems with one another. Enhancing cross-border payments requires more than advances in technology. It requires alignment of regulatory and legal frameworks to enable a strong foundation.

A global mindset

To build a globally connected payments landscape, an emphasis must be placed on standards. This way localised innovations in payments are not made at the expense of seamless international transactions.

To harmonise regulations across borders without a common regulatory body, the creation of standards can be a relatively simple way to ensure interoperability. Harmonised message formats, observed domestically but adopted at scale globally, can pave the way for market infrastructure linking that can allow different payment systems to ‘speak the same language.’

The importance of such standards has been acknowledged in existing regional payment systems. A Bank for International Settlements (BIS) survey conducted among 31 faster payment system users revealed a common trend among them to adopt the data-rich ISO 20022 standard in payments and financial services more generally.

Looking ahead 

Global payments are evolving quicker than ever, with exciting innovations happening almost every day. One of these is the emergence of digital currencies of course. Here too we need to be mindful of ensuring international interoperability, even as new forms of money are developed domestically. 

Alongside efforts to connect multiple Central Bank Digital Currency (CBDC) systems, there’s also a massive potential for linking domestic instant payment systems (IPSs) too. IPSs are available in around 60 countries. To explore this potential, the BIS Innovation Hub launched project Nexus – a scalable cross-border payment network that would link IPSs in multiple countries.

While the potential of CBDCs is yet to be determined and their place in the global payments system is uncertain, their rise has brought to the fore the importance of global connectivity and standards in making the way we exchange the money of the future a seamless experience. And whatever that future looks like, it needs to be fit for an interconnected world.


About Saskia Devolder

Saskia is leading a new strategic programme to bring together the key components of the SWIFT strategy towards instant, frictionless payments.  The programme will ensure the right attention, structure and alignment across the company with the G20 agenda related to cross-border payments.

Till December 2021, Saskia, reporting to the Executive Business Development, led teams, located on five different locations, responsible for business development and customer engagements.  She was also responsible for the expert teams supporting the financial industry and market infrastructures focusing on payments, capital markets, ISO20022 and technological innovation across EMEA.  

Saskia is with SWIFT since 2006 and held several functions covering capital markets and banking sales activities, developing community engagement across different regions and maintaining close relationships with senior representatives of the banking and financial industry community.

Prior to joining SWIFT, she had different functions at Mastercard International and Sterling Software.


SWIFT is a global member owned cooperative and the world’s leading provider of secure financial messaging services. We provide our community with a platform for messaging and standards for communicating, and we offer products and services to facilitate access and integration, identification, analysis and regulatory compliance. 

Our messaging platform, products and services connect more than 11,000 banking and securities organisations, market infrastructures and corporate customers in more than 200 countries and territories. While SWIFT does not hold funds or manage accounts on behalf of customers, we enable our global community of users to communicate securely, exchanging standardised financial messages in a reliable way, thereby supporting global and local financial flows, as well as trade and commerce all around the world.

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Keywords: cross-border payments, ecommerce, marketplace, regulation, CBDC
Categories: Payments & Commerce
Companies: SWIFT
Countries: World
This article is part of category

Payments & Commerce


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