Public-Private partnership remains critical to improving cross-border payments

Cross-border payments are critical to the global economy, fuelling international commerce with an estimated $250 trillion in annual volume by 2027.¹ However, cross-border payments are inherently more complicated than domestic payments, sometimes leading to challenges with cost, speed, transparency, and access.

Given this complex, fragmented landscape, the G20 Roadmap for Enhancing Cross-border Payments is bringing together stakeholders from around the world to identify challenges and solutions. This work has significant implications for Europe, especially future efforts to further harmonise payments within the single market. A key characteristic of the roadmap’s approach has been a commitment to public-private partnership. We see tremendous value in this partnership and believe it is the single most important factor in the success of the G20’s work.

To better understand why this partnership is so important, it is worth spending a bit of time outlining the public and private sectors’ respective roles and responsibilities in improving cross-border payments. Let us start with the private sector.

First and foremost, the private sector excels in meeting end users’ needs in making and receiving cross-border payments. These needs are ever evolving and vary depending on the use case. For instance, someone making a payment to book a vacation abroad likely has different needs than a migrant worker sending money back home to their family. We should keep business needs in mind too: for instance, a small business’ cross-border payment needs will differ significantly from those of large multinational corporates. As we have written about recently, private sector firms solve for these different use cases with customised solutions, all of which require different considerations in the roadmap.

Addressing user needs also requires that the private sector make continuous investments in innovation. Despite the complexities and pain points facing cross-border payments, Visa and others in the industry are developing innovative technologies and services to drive down costs and make payments faster, safer, and more transparent. Over the last five years, Visa invested over €9 billion to secure and enhance our technology platforms, preventing roughly €24.5 billion in global fraud every year with incidents of fraud occurring in less than 0.1% of transactions.

We are also committed to streamlining cross-border payments with our global money movement platform Visa Direct, which enables nearly 30 new types of payment flows, including remittances, merchant settlement, and employee pay-outs with real-time capabilities across 190 countries. For business-to-business payments, Visa B2B Connect enables same-day payment services and a seamless cross-border experience by removing some of the frictions associated with correspondent banking.

Even with these investments, the private sector’s role is only half the story: the public sector plays an equally important role, especially in addressing today’s biggest issues. In looking at the G20 work itself, an obvious and defining role for the public sector is that of convener. Intergovernmental organisations like the Bank for International Settlements (BIS) and the Financial Stability Board (FSB) embody this role on a global stage, bringing many stakeholders together to find real solutions. This same approach has been especially important in Europe, where stakeholder inclusion is an essential part of the policymaking experience.

The public sector also plays a critical role in establishing frameworks and rules for the system, which protects consumers, encourages fair competition, and maintains financial system integrity. This is perhaps the single most important role in cross-border payments – without rules, end users would lose trust in the system. Here, European policymakers have played a particularly important role as first movers in protecting consumers and harmonising standards and regulations across multiple markets.

Of course, some rules occasionally do more harm than good, especially when rules vary widely across corridors and increase payment friction. Here, we see tremendous potential to improve end user experiences by streamlining regulatory requirements. This is also something the public sector widely recognises and is seeking to address with the G20 work, particularly through the FSB’s taskforce on legal, regulatory, and supervisory matters.

The public and private sectors each have their respective strengths and responsibilities when it comes to improving cross-border payments, but neither can do it alone. As the G20 Roadmap progresses, we are encouraged to see that public-private partnership remains at the core of this work, and we commend the leadership of the FSB, BIS, World Bank, and other public institutions driving this work. At Visa, we remain committed to improving cross-border payments by meeting end user needs and maintaining productive partnerships with governments around the world.