Over the past two years the most common panel subject I have moderated concerns payments. Not just the processes of transacting cash for goods and services, but discussions involving how important payment rails are to the global economy, trade and even the wellbeing of society. Most often these panels discuss cross-border challenges, experiments and initiatives all aimed at determining the final goal of seamless, cheap, fast and, most importantly, payments that serve an international ecosystem.
Discussions around cross-border payments usually involve several talking points. A look at how banks are managing Swift’s ISO 20022 migration, a reminder that many people at major banks feels perfectly content with the services of real-time gross settlement systems, and of course, crypto currencies, stablecoins and central bank digital currencies are often touted as the silver bullet to make all this cross-border friction go away.
Last week, during Fintech Week London, I moderated a panel simply called “International Payments”. There was no marketing blurb, populated by broad public relations intern-penned questions, just simply: international payments.
No bank was on this panel. The pared down content blurb made me question what I mean by international payments, how the industry looks at it and who we exclude when we work only within those narrow parameters.
The panel included Breno Maximiano of Gnosis Pay who preached the gospel of stablecoins, Stephen Oluwatobi of Kora who reminded me there is a world beyond Swift, Niyati Joshi of B4B Payments who showed me what global truly means, and Luke Stubbs of Shoosmiths who brought in the legal considerations.
Two years ago I chaired a similar panel — all banks and Swift — which asked the audience if cross-border payments had “a problem”. Many in the audience didn’t see a problem because most central banks connect to RTGSs. However, Joshi pointed out that while most central banks do run a RTGS they are not universal and not used everywhere around the globe. How can a system without true global reach fit into the G20 roadmap to improve cross-border payments and support financial inclusion?
When I asked Oluwatobi what role he saw for Swift in the cross-border payment dilemma he gave me a look and laughed “In Africa? Not much”.
I’ll let him say it better:
“We cannot generalise using templates on the subject of international payments. Understanding the problems in each region and proffering the best solution has worked. While some African countries embrace cards, some others have employed other means that directly tackle the inefficiencies in their finance system; for example, Kenya has directly and indirectly banked a significant portion of its population via mobile money.
“Regulators and international agencies still need to be educated to ascertain that innovation is not seen as the enemy. Blockchain technology has the capabilities to smartly enable interoperability continentally and globally, among other benefits it can provide, such as security and trust. However, the potential downsides (which the centralised and conventional models have) have triggered disdains.”
Various global projects aimed at finding the best solution to cross-border payments, as well as the ongoing ISO 20022 migration, are aimed at finding a global solution. But global for whom? For the wholesale and corporate business of transaction banks, maybe. However, for farmers in Kenya, a local, specialised payment solution, via mobile phones and blockchain, may be more viable and inclusive.
When we talk about “international” on any subject, never mind payments, it is important to realise that the group is made up of various, disparate and unique groups with specialised needs. Should the industry pin its hopes on a global standard solution? Or is the future more a patchwork of fragmented rails and schemes woven together for the common global good?
