Rapid globalization and advances in available technologies are driving the demand for more efficient, transparent and accessible cross-border payment systems. Multilateral payment platforms have emerged as a promising solution to address the needs of an increasingly global population of users who need to send and remit funds across borders for a variety of reasons.
Multilateral payment platforms are designed to operate across regions and potentially reduce costs while increasing the speed, security and transparency of cross-border payments. G20 Roadmap for Strengthening Cross-Border Payments The Financial Stability Board (FSB) has also identified them as a key priority for strengthening such payments.
of Bank for International Settlements (BIS) Innovation Hubof Point Zero Forum 2023 The roundtable brought together key stakeholders and leaders from both the public and private sectors to discuss the opportunities and challenges in cross-border payments. Participants reviewed the progress made so far, discussed potential opportunities and challenges, and shared lessons learned from their experiences.
Guided by the FSB’s roadmap and its efforts to develop action plans consistent with it, the Committee on Payments and Market Infrastructures (CPMI) has outlined the following priority actions: Three interrelated themes: Interoperability and expansion of payment systems, legal, regulatory and supervisory frameworks, cross-border data exchange and messaging standards.
Theme 1: Establishing optimal governance and interoperability frameworks
Effective governance and interoperability frameworks are essential to managing the complexities of cross-border payments. For a multilateral payments platform to work well, there need to be clear rules and ways for different systems to work together.
Among the suggestions that came out of the forum were having a neutral party, such as the public sector, to ensure inclusive participation and that participants are treated and engaged fairly.
As the multilateral platform expands, Governance Framework It will need to evolve to accommodate changes in board participation, voting rules, regional representation and economic models. Open, risk-proportionate, transparent and accessible policies are key to ensure inclusive participation of all players, including smaller banks and non-bank payment institutions.
Government and private sector partnerships will also be important, with companies providing investment and technology and governments setting the overall roadmap to drive adoption and interoperability among participants. 
An important model in Southeast Asia is the BIS Innovation Hub’s Project Nexus. Instant payment system across multiple countries Through multilateral collaboration, we provide a blueprint for a scalable cross-border payments network. Successful proofs of concept with the Eurozone, Malaysia and Singapore in 2022 confirmed the feasibility of a multilateral network of instant payments systems.
Building on this success, ongoing efforts are underway with five other countries – Indonesia, Malaysia, the Philippines, Singapore and Thailand – to establish the necessary foundations for a future production-capable multinational platform based on the Project Nexus blueprint in 2023.
Theme 2: Dealing with diverse legal, regulatory and supervisory frameworks
Second, participants noted that different national laws and regulations can make cross-border payments difficult, especially in the areas of anti-money laundering (AML), counter-terrorism financing (CFT), data protection, payment dispute resolution, and settlement finality, which need to be resolved if multilateral payment platforms are to fully realize the benefits of interoperability.
One idea is to have a central system that checks payments against sanctions lists, which could make the process faster and easier. New technologies such as artificial intelligence and special privacy tools could also help keep data safe while making sure payments comply with the rules.
Regional and global data governance frameworks such as the APEC Cross-Border Privacy Rules Certification and Europe’s General Data Protection Regulation can help overcome the challenges of cross-border data flows.
Another key point is ensuring that payments, whether within a country or across borders, are final and irreversible.BIS’s Project Nexus is working to connect different countries’ instant payment systems to create a blueprint for a payments network that is scalable and has mechanisms to mitigate credit, liquidity and settlement risks.
These collaborative efforts will foster an enabling environment that will improve the efficiency and accessibility of multilateral payment platforms.
Theme 3: Developing a viable commercial model
Forum participants believe that establishing a viable commercial model will be a key condition for businesses to want to join such platforms: they need a clear way for them to make money, they need to control the costs of running the platform, and they can persuade governments to support them by showing how cross-border payments benefit society.
It is also important to ensure that benefits are shared fairly between sending and receiving countries. Balancing incentives between sending and receiving countries is crucial and costs should not be passed on solely to end users.
While revenue sharing is essential to ensure mutual benefit for all cross-platform participants, different pricing models must be tailored to the objectives of the payment system and the specific needs of end-users.
To address the challenge of managing trapped liquidity in cross-border payments, various solutions already exist, including payment versus payment, netting, liquidity optimization using gridlock resolution algorithms, and distributed ledger technology, which can reduce foreign exchange costs, especially in markets with illiquid currencies.
The way forward
Strengthening cross-border payments requires a comprehensive approach that involves both the public and private sectors. Fostering strategic collaboration among stakeholders and leveraging the latest technology can ensure the scalability and future interoperability of multilateral payment platforms.
Critical components for the success of a multilateral platform include designing optimal governance and interoperability frameworks, addressing differences in legal, regulatory and oversight frameworks, and implementing viable models for generating revenue.
The Point Zero Forum roundtable and the BIS Innovation Hub’s Project Nexus are important starting points that will pave the way for creating a useful blueprint for adoption by other multilateral cross-border payment platforms in the future.
As these platforms continue to develop and refine these key components, they will be better positioned to realize the full potential of a multilateral payments system for cross-border transactions.
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