EBAday 2025: Solving for low-value cross-border payments

Finextra

4 days ago

The panel session 'Evolving Business Models in Cross-Border Payments', explored the complexity and evolution of modern cross-border payments.
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Moderating the last panel session of EBAday, Leo Lipis, chief executive of Lipis Advisors, talked all things cross-border payments with a panel including Akshat Saharia, head of European financial institutions product and propositions global payments solutions at HSBC; Anastasia Serikova, head of Visa Direct for Europe, Visa Direct; Emanuela Saccarola, head of cross-border payments, Citi Services; Sanjeev Bhatti, director - product management global payments at BNY; and Steve Naudé, global managing director, Wise Platform.
As there have been multiple sessions discussing the complexity of cross-border payments, Lipis kicked off the session by pointing out that this session will focus on low-value payments of under $100,000. The panel highlighted that one of the main differences between high- and low-value payments is the varying consumer expectations.
Naudé began by outlining that speed and price are not the crucial factors for high-value payments, whereas security is essential. For low-value payments however, consumer have expectations for payments to be seamless, cheap, and instant. How these payments are processed also looks very differently in the backend.
Saccarola picked up on the complexity aspect: "In the past, we had one way to make cross-border payments, and that was wire. Now you have instant payments, cards, wallets, digital assets. So this space gets very complex very quickly. And complexity is added up by the fact there are 200 countries in the world. Each corridor, it's one cross-border payment corridor you have to solve for. So if you do the math, that's about 20,000 combinations."
A poll to the audience revealed that 66% of participants' banks use RTGS for the Euro leg of cross-border, cross-currency payments, 12% use real-time payments, and 8% use Batch.
Another aspect is perceived segmentation of high- and low-value payments. "We always think about retail as low-value," Serikova explained. "In reality, Visa services a couple of ultra-high net worth individuals, and those payments can be really high-value. And equally, we think of large corporates as high value, but in reality, how many of them have supplier payments under 10k? [Financial institutions have] a whole matrix of customer needs that they need to be able to service accordingly."
However, it's not just consumer expectations that have changes, B2B cross-border payment are affected as well. As low-value payments expectations have evolved, we have quickly taken those expectations from our private to our business lives, and organisations are increasingly demanding more seamless and instant payments. On top of that, the gig economy is another aspect that has shifted the expectations of cross-border payments.
Considering all of these factors, how many priorities are too many priorities? How can financial organisations address this complexity?
"The world of cross-border payments is getting very complicated," Bhatti stated. On top of traditional methods, you have "instant payments schemes opening up, which have different limits, different rules, different requirements. You have projects that are tied to these schemes like IHP and Nexus. And then you've got blockchain solutions like Agorá. And you can get involved in all of these, if you've got the bandwidth to do it, but it's probably easier to select a partner who can insulate each chain, or multiple partners, and it's relatively straightforward to connect to it."
Saccarola agreed that organisations need to decide whether they want to do it on their own or work with a provider, or even work with providers for certain currencies and implementing solutions for other currencies. It's all about complementing their strengths.
A second poll to the audience enquired about the biggest barrier to changing operating models in low-value cross-border payments. 37% of respondents stated inertia and complexity of change, 22% mentioned regulation, 18% answered scheme limitations, 16% stated lack of a business case, and 4% answered lack of awareness.
Saharia commented: "There is a lot happening, but I sometimes feel that with all the right intent, all the greatest technology out there, we sometimes forget what we are trying to solve." For example, "the talks about interconnecting RTP schemes. I think it's a great vision, but [..] we forget how complex it is to bring central banks and regulators to work together to come up with a common framework how to prevent fraud if any participants fail? It's already very hard when it's within a single country. It gets absolutely complex when it's multiple countries. [..] While we have all these different models, we keep forgetting that there was an old world for correspondent banking—sorry, I'm a banker, I have to say this—that still works. There are lots of things that have to be done to improve it, and a lot of work has happened already."
Naudé agreed that banks need to find the right partnerships for the problems they are trying to solve for. He emphasised that there are a lot of options in the market, so institutions should look at the quality of infrastructure they would be purchasing. "How many payments are going to be reachable with the beneficiary in what period of time? How are providers connected into those rails?"
Serikova added the importance of compliance when searching for the right partnership, and striking the balance between "global coverage, but it needs to be combined with really deep local expertise."
Looking towards the future of cross-border payments, Bhatti mentioned that the "EBA have a big role in this. I think its core strength is harmonisation and an early spot of risks. As we move towards this new horizon, that harmonisation is going to be key. But also as payments get quicker, being able to spot the risk and communicate it across the community quickly could be essential."