Payment firms have expressed disappointment over the news that a G20 initiative aimed at improving cross-border payment efficiency is set to miss its initial deadline.
According to the G20’s Financial Stability Board (FSB), global financial authorities will fail to meet the 2021 goals, which aimed to reduce the average cost of retail payments to no more than 1% of the payment value and ensure that 75% of wholesale and retail payments are credited within an hour of initiation.
“It’s becoming clear that the (G20) targets will not be achieved by 2027,” remarked FSB deputy secretary general Martin Moloney, as reported by Reuters. He attributed the delays to the number of countries involved and the challenges of upgrading existing infrastructure.
Moloney noted that the G20 faces two options: extending the original deadline or establishing a new timeline.
Payment processors and fintech companies have understandably reacted with disappointment, citing outdated technology, rigid regulations, and the influence of dominant legacy banks as contributing factors.
David Patrick, head of payments strategy at RedCompass Labs, emphasized the need to tackle the conflicting regulations across different jurisdictions. He stated, “Each jurisdiction imposes its own rules on data protection and anti-money laundering, often with limited interoperability, introducing friction instead of efficiency.” He advocated for greater regulatory alignment, focusing on harmonized standards and open access to foster innovation.
Mike Walters, CEO of payment technology vendor Form3, called for a complete overhaul of payment infrastructure. He explained, “The industry still relies on correspondent-bank networks established in the 1970s, which are costly and fraught with difficulties, necessitating banks worldwide to maintain multiple nostro accounts and face liquidity costs.”
He added, “If the G20 wants to cut costs, it must harmonize regulations, mandate real-time settlement across jurisdictions, and build open, resilient cross-border systems that can scale safely without legacy failures.”
Laurent Descout, CEO and co-founder of digital bank Neo, pointed to the oligopoly of incumbent banks as a key issue. While fintechs have significantly reduced cross-border fees since 2011, he noted that a small number of major banks still dominate the correspondent banking sector, limiting competition.
However, Descout identified hope in new messaging formats like ISO20022 and on-chain networks, which could dramatically lower costs. “What is needed now is adoption across supply chains,” he concluded.