How can e-payments improve efficiency and convenience for cross-border transactions and remittances?

??Fintech companies, in particular, have developed key solutions like real-time payments, reduced processing times and fees, payment security and fraud prevention, improved payment infrastructure, improved interoperability between different financial systems, and reduced forex costs.

Digital platforms and financial technology (fintech) solutions can streamline processes, eliminating the need for intermediaries and reducing associated fees. Electronic payment systems enable near-instantaneous settlements, allowing funds to be transferred in real-time or within a matter of hours. This is in stark contrast to traditional methods that may take days for cross-border transactions to be completed. Dedicated cross-border payment platforms and fintech services are designed to optimize the efficiency of international transactions. These platforms leverage technology to streamline processes, reduce manual intervention, and enhance overall transaction speed.

Even though e-payment systems offer many different advantages, one of the main advantages they offer is that of reducing costs and allowing faster transactions. Certain countries, like China and India, are very advanced in this area. For example, speaking at the Hong Kong Monetary Authority-Bank for International Settlements Conference, the former head of the People’s Bank of China Zhou Xiaochuan confirmed that 90 percent of payments in China are already digitized. When it comes to India, India deployed its Unified Payments Interface back in 2016 and is currently being expanded. The system has proved to be an absolute success,becoming one of the most widely used payment systems in the world, in terms of number of users and transactions.

E-payment systems operate round the clock, providing users with the flexibility to initiate transactions at any time. This accessibility contributes to faster processing and quicker cross-border remittances, especially in situations where traditional banking hours may cause delays. Mobile-based e-payment solutions make cross-border transactions and remittances more accessible to a broader population. Users can initiate and manage transactions directly from their mobile devices, promoting financial inclusion and convenience.

E-payment systems offer indeed a greater accessbility and convenience, playing a key role when it comes to promoting financial inclusion. Whilst financial inclusion is not an easy area to discuss since the reasons to be financially excluded can be very diverse, the lack of access to phyisical bank branches and lack of access to accessible and convenient means of payment are one of the main reasons why certain people are currently excluded from the financial systems. E-payments can help solve that.

I strongly believe Central Bank Digital Currencies (CBDCs) will play a key role when it comes to making cross-border payments cheaper, more seamless, more efficient and more transparent. There are many possible motivations behind CBDCs: They can replace physical notes; they can be used to improve financial stability as a monetary policy tool, to promote financial inclusion, to fight against financial crime, improve payment efficiency and reduce intermediary risks, etc. However, while the introduction of CBDCs promises a variety of efficiency savings and new functionalities, it is important to remember that it does not solve all the problems of payments - particularly cross-border payments - on its own.