Over the past two decades, domestic retail payments in economies across the globe have become more rapid and efficient, with many countries providing 24/7 payments with minimal settlement time. The picture is bleaker for cross-border payments, which remain cumbersome, expensive and slow. The development of CBDCs in different jurisdictions may ameliorate this, as 62% of our survey respondents noted in OMFIF’s recent report ‘Retail CBDCs: The next payments frontier’.
According to the World Bank, global remittances were valued at $689bn in 2018, the largest type of person-to-person cross-border retail payment. In some countries, such as Haiti and Kyrgyzstan, remittance inflows make up more than 30% of GDP. Currently, retail cross-border payments such as remittances go through banks or slow money transfer services like Western Union or MoneyGram that charge high fees, using Swift messaging. Swift benefits from its network, scale and reliability, but still uses correspondent banking networks, which derisking has weakened.