The Reserve Bank of Australia (RBA) today released a report analysing the benefits, design choices and challenges associated with linking fast payment systems across countries.
The report finds that connecting fast payment systems has the potential to considerably improve the speed and transparency of cross-border payments, benefiting both end users and service providers. Crucial to realising these benefits are well-designed governance, scheme rules and payments processing capabilities, which help to manage risk and ensure a seamless cross-border payments experience. However, establishing an interlinking arrangement poses challenges, including dealing with differences in legal and regulatory frameworks across participating jurisdictions and agreeing on governance arrangements and scheme rules.
Linking national fast payment systems is receiving significant international attention as a promising way to improve the cross-border payments experience. In light of these developments and Australia's commitment to enhancing cross-border payments, the RBA recently collaborated with a number of Australian industry participants involved in cross-border payments to study the interlinking of fast payment systems.
The report contributes to the international discussion on this topic and encourages further analysis of key design considerations. This work will also help inform future discussions in Australia about the potential for the domestic fast payment system, the New Payments Platform (NPP), to be linked to fast payment systems in other countries.
"Cross-border payments are vital in an interconnected world. Further efforts are needed to make them faster, cheaper and more transparent. This study marks an important step toward understanding the potential for linking fast payment systems to drive improvements in these areas. The RBA will continue to engage with industry, public sector agencies and international stakeholders to explore this and other avenues for the Australian financial system to deliver a better cross-border payments experience," said Brad Jones, Assistant Governor (Financial System) at the RBA.
Background information
As international payments activity continues to grow, there is an increasing need for efficient, competitive and safe cross-border payment services. The G20 countries, including Australia, have committed to making cross-border payments cheaper, faster, more transparent and more accessible. Fostering the interlinking of fast payment systems is a priority initiative in the G20 roadmap to enhance cross-border payments.
Enhancing cross-border payments is a strategic priority of the RBA's Payments System Board, and the RBA is involved in a number of key initiatives aimed at achieving better outcomes for end users in Australia and overseas.
