Central banks, regulators, banks, and FinTechs are converging on the same conclusion: the old correspondent banking model, while still indispensable in many corridors, is too slow, too fragmented, and too opaque for a world that trades, hires, shops, and remits in real time. The question is not whether the system will change, but which combination of settlement rails, data standards, and governance models will define the next era.
Cross border payments are much more than a specialist banking function. They are the monetary infrastructure behind trade invoices, platform commerce, family remittances, treasury operations, and the everyday movement of value across jurisdictions. The BIS has stressed that improving these payments is essential to a more efficient and inclusive global economy, while also noting that businesses need reliable payment channels in the same way they need transport links. Yet cross border transfers still have to navigate multiple currencies, time zones, legal regimes, compliance obligations, and data standards, which creates delay, manual intervention, and extra cost. The BIS also says the correspondent banking network has become more concentrated and less competitive over time, leaving some markets underserved.
The human cost is most visible in remittances. The World Bank says the global average cost of sending remittances remains 6.36 percent, still well above the G20 and United Nations target of 3 percent. The BIS noted in May 2026 that remittances to low and middle income countries reached $650 billion in 2024, and that lowering costs to the 3 percent target could save billions each year. In some corridors, the burden is far more severe, with the BIS pointing to costs of $20 or more on a $200 transfer in Sub Saharan Africa. That is not merely a pricing problem. It is a drag on household income, financial inclusion, and formal channel usage.
The policy response has been substantial. The G20 Roadmap for enhancing cross border payments, coordinated through the FSB and CPMI, set quantitative targets for cost, speed, transparency, and access.
In its December 2025 assessment, the BIS said most international policy actions were completed or nearing completion, but it also judged that the end 2027 targets were unlikely to be met on time. The same bulletin reported that as of 2025, only 35 percent of global cross border retail payments and 55 percent of wholesale and remittance payments were credited within one hour of initiation, versus a target of 75 percent. The message is clear. The policy architecture is advancing, but the end user experience is still not good enough.
Domestic instant payment systems have changed expectations. The BIS says there are now more than 70 countries where domestic payments can reach their destination in seconds at near zero cost to the sender or recipient. That matters because cross border innovation increasingly depends on connecting those domestic rails rather than replacing them. Project Nexus, the BIS Innovation Hub initiative, is built around that insight. Its published material says interconnecting domestic instant payment systems can enable cross border payments from sender to recipient within 60 seconds in most cases, and it positions Nexus as a blueprint for standardising how those systems communicate.
The practical lesson is that speed is not a single technology feature. It is the result of aligned operating hours, common data, interoperable APIs, and settlement discipline. The Bank of England’s RTGS renewal shows how central infrastructure is being modernised from the core. It migrated CHAPS to ISO 20022 messaging in June 2023 and then launched a new RTGS core ledger and settlement engine in April 2025, creating what it describes as a resilient platform for central bank money settlement.
In the United States, the Federal Reserve’s FedNow Service went live in July 2023 and provides instant payments to depository institutions through account based settlement. These are domestic systems, but they matter because they are the technical and institutional building blocks from which cross border links are increasingly assembled.
Standards are doing as much heavy lifting as software. The BIS bulletin on cross border payments says key policy outcomes now include international recommendations on payment system operating hours, ISO 20022 and API harmonisation, and supervision of non bank payment service providers. The same bulletin says fast payment systems are spreading quickly, with more than 90 in operation and more than 20 under development. That growth matters because payment speed is not only about milliseconds. It is about whether systems can exchange enough structured information to support compliance screening, reconciliation, and straight through processing without exhausting the economics of the transaction.
CBDCs have moved from theory to policy design
Central bank digital currencies are now firmly part of the payments conversation. The BIS survey published in August 2025 found that 91 percent of the 93 central banks surveyed were exploring either a retail CBDC, a wholesale CBDC, or both. It also found that wholesale CBDC exploration was at a more advanced stage than retail work. That is significant because it suggests the centre of gravity has shifted from abstract debate to institutional design, testing, and risk management. It also shows that central banks are trying to preserve the role of central bank money even as cash use declines and tokenisation gains ground.
The IMF’s 2024 note on retail CBDC and cross border payments makes the policy logic explicit. It says lessons from experimentation and research are being used to identify design and policy considerations so retail CBDC systems can be compatible with cross border payments. In other words, CBDCs are not being pursued only as domestic payment instruments. They are also being assessed as potential components in a wider international payment architecture. The IMF note is careful, however, to stress that retail CBDC design choices matter, and that wholesale CBDC and other forms of money raise parallel but not identical questions.
Europe illustrates how this debate is moving from concept to programme management. The ECB says that in October 2025 the Eurosystem moved to the next phase of the digital euro project, and it is currently aiming to be ready for potential first issuance during 2029, assuming legislation is adopted in 2026. The ECB also says the digital euro would be free of charge for users, usable across the euro area, and designed to complement cash and existing private sector solutions. It has further stated that there is currently no European digital payment option covering the whole euro area, with 13 out of 20 countries relying on international card schemes for card payments. That is a powerful reminder that payment sovereignty is not an abstract policy phrase. It is a market structure question.
The deeper significance of CBDCs is not simply that central bank money might become digital. It is that digital central bank money could be designed to work natively with identity, compliance, and settlement logic rather than having those functions bolted on after the fact. That is why wholesale and retail pilots are increasingly being discussed alongside interoperability, cross border liquidity, and programmable controls. The challenge is to keep the benefits of public money, trust, finality, and stability, while avoiding the fragmentation that would arise if every jurisdiction built a closed and incompatible system.
Blockchain is evolving into tokenised settlement infrastructure
The industry once used blockchain as a catch all word for almost any payment innovation. That phase is fading. The more serious conversation now centres on tokenisation, programmable money, and shared ledgers. The BIS says tokenisation has the potential to reshape the financial system and can improve payments and financial markets by increasing efficiency, transparency, and accessibility, while central banks preserve the singleness of money. That is a major shift in emphasis. The point is no longer whether distributed ledger technology sounds modern. The point is whether it can support atomic settlement, better data, and lower reconciliation costs without undermining trust.
Project Agorá is one of the clearest examples of this new phase. The BIS says the project will test how tokenised commercial bank deposits can be integrated with tokenised wholesale central bank money in a public private programmable core financial platform. The institution’s June 2025 statement adds that the goal is to improve cross border payments in the banking system and make them seamless, more efficient, and cost effective. This is not a retail crypto experiment. It is a wholesale architecture test aimed at the plumbing of international finance.
Project mBridge is another important signal. The BIS said in November 2024 that mBridge had reached minimum viable product stage in mid 2024. The project, involving multiple central banks and commercial banks, was built on distributed ledger technology to enable instant cross border payments and settlement. The significance lies not merely in speed, but in the model it tests: shared infrastructure across jurisdictions, where settlement and messaging can occur on the same digital platform rather than passing through a chain of intermediaries.
This is where blockchain becomes commercially meaningful. In the strongest versions of the argument, tokenised deposits and wholesale CBDC could allow payment instruction, compliance logic, foreign exchange conversion, and settlement to be orchestrated in one controlled workflow. That reduces duplication and can shorten the period between initiation and finality. In the weaker versions, the technology adds another layer of complexity without delivering enough interoperability to justify the cost. That is why the BIS repeatedly stresses governance, legal clarity, and public private coordination. The technology can compress process steps, but it cannot by itself solve jurisdictional fragmentation or misaligned incentives.
Stablecoins, compliance, and the trust question
Any serious discussion of payments innovation now has to include stablecoins. The BIS said in May 2026 that stablecoins have an understandable appeal in remittance and cross border use cases because they can offer faster transfers and, in some settings, a store of value outside fragile domestic systems. But the same source is blunt about the risks. It points to potential runs, monetary sovereignty concerns in smaller economies, irreversible losses from operational failures, and financial integrity risks where private wallets operate on opaque networks. It also notes that evidence on cost advantage is mixed, and that stablecoins are not a universal substitute for traditional rails.
That caution matters because payments are a trust business. Consumers care about whether money arrives, whether disputes can be resolved, whether the transfer can be reversed in a fraud case, and whether the channel will still be available tomorrow. Businesses care about certainty of settlement, auditability, sanctions screening, and the timing of liquidity release. This is why the BIS and IMF repeatedly return to the same conclusion. Innovation must be embedded within a robust legal and regulatory framework, with sound governance and oversight. Technology can accelerate payments, but it cannot replace the institutional legitimacy that underpins money.
That is also why data standards are becoming as strategic as payment rails. The BIS says current frictions are compounded by unharmonised messaging standards and legacy formats that lack the structured information needed for straight through processing and effective compliance screening. It has also published recommendations on harmonising ISO 20022 data requirements, application programming interfaces, and payment system operating hours. In plain English, a faster payment system that still produces messy data is only a partial victory. The next competitive frontier is clean data at the point of payment.
The best performers in the next decade are therefore likely to be the jurisdictions and institutions that treat payments as an ecosystem, not as a single product. That means domestic real time infrastructure, cross border interoperability, modern standards, better compliance tooling, and governance that can support both banks and non bank participants. It also means accepting that public and private money will continue to coexist. The most realistic future is not a winner takes all contest between CBDCs, stablecoins, and bank deposits. It is a layered market in which each instrument survives only where it delivers a genuine functional advantage.
Comparative Strategic Framework: How Real Time Rails, CBDCs, and Blockchain Models Differ in Practice
For policymakers, institutional investors, treasury leaders, and payment infrastructure providers, one of the most pressing strategic questions is not simply which innovation is most technologically advanced, but which model is most commercially viable, scalable, and regulatorily sustainable. The reality is that each major payments innovation pathway offers distinct advantages depending on use case, jurisdiction, and governance requirements.
Real time domestic payment rails, such as those modernised through ISO 20022 standards, are currently the most practical route for immediate incremental progress. According to the BIS and national central bank infrastructure programmes, these systems build on trusted monetary frameworks, regulated institutions, and proven settlement models. Their primary weakness lies in fragmented international interoperability, where gains often depend on bilateral or multilateral agreements.
CBDCs, particularly wholesale variants, offer more transformative potential. The BIS and IMF both indicate that wholesale CBDCs could significantly improve institutional settlement efficiency by enabling programmable delivery versus payment, cross border liquidity optimisation, and near instant finality in central bank money. However, legal harmonisation, geopolitical trust, privacy governance, and technical interoperability remain substantial unresolved challenges.
Blockchain based tokenised deposits and stablecoin ecosystems introduce additional flexibility, particularly in programmable finance and decentralised liquidity models. Yet as BIS analyses repeatedly emphasise, these systems face more acute concerns regarding governance, reserve integrity, financial crime controls, and monetary fragmentation.
For corporate strategy teams, this suggests a layered transition rather than wholesale replacement. Legacy systems are unlikely to disappear quickly; instead, firms may need to integrate multiple infrastructures simultaneously, balancing speed, compliance, and jurisdictional suitability.
Strategic Comparison of Major Cross Border Payments Innovation Models
| Innovation Model | Core Strengths | Principal Weaknesses | Institutional Readiness | Primary Commercial Use Cases | Regulatory Complexity |
|---|---|---|---|---|---|
| Real Time Payment Rail Interlinking | Fast implementation, trusted banking frameworks, lower operational disruption, scalable through standards such as ISO 20022 | Limited by jurisdictional fragmentation and operating hour differences | High | Retail transfers, SME trade, remittances, treasury payments | Moderate |
| Wholesale CBDCs | Central bank backed settlement finality, programmable liquidity, reduced intermediary layers | High legal complexity, interoperability uncertainty, central bank coordination burden | Medium | Interbank settlement, securities settlement, trade finance | High |
| Retail CBDCs | Financial inclusion potential, public money accessibility, domestic payment resilience | Privacy concerns, consumer adoption uncertainty, political sensitivity | Medium to Low | Consumer payments, domestic transfers | High |
| Tokenised Commercial Bank Deposits | Maintains private sector banking role while improving programmability | Requires common standards and platform integration | Medium | Corporate treasury, supply chain payments, trade settlement | Moderate to High |
| Stablecoins | Potential speed, 24 hour availability, global reach in select corridors | Reserve risk, regulatory scrutiny, monetary sovereignty concerns | Medium | Remittances, digital commerce, certain emerging market corridors | Very High |
| Legacy Correspondent Banking | Established global reach, broad legal familiarity | Slow, expensive, opaque, high reconciliation burden | Very High | Large corporate payments, global banking operations | Moderate |
This framework highlights that the future payments ecosystem is unlikely to converge around a single dominant solution. Instead, the global system is evolving toward coexistence, where different rails serve different functions depending on transaction size, jurisdictional trust, compliance obligations, and speed requirements.
For example, multinational corporates may continue to use correspondent banking for high value strategic transfers while shifting payroll, supplier settlements, or platform disbursements toward real time or tokenised infrastructures. Likewise, wholesale CBDCs may become highly relevant in capital markets and sovereign settlement long before retail CBDCs achieve widespread consumer penetration.
The broader strategic implication is that payments innovation should increasingly be understood not as a technology race, but as infrastructure diversification. Institutions capable of operating flexibly across these multiple systems are likely to hold competitive advantage.
In this sense, the payments revolution mirrors broader digital transformation trends: the winners may not necessarily be those who build entirely new systems, but those who most effectively integrate innovation into trusted existing frameworks while preserving security, compliance, and user confidence.
What the next phase will likely reward
The next phase of payments innovation will reward corridors where policy alignment is strong and liquidity is well managed. It will reward firms that can orchestrate across multiple rails rather than betting on a single network. It will reward banks that modernise their data architecture, because richer structured messages can reduce compliance costs and improve operational control. And it will reward regulators that are willing to coordinate on operating hours, supervision, access, and data frameworks rather than leaving each layer of the stack to evolve in isolation. The BIS has already made clear that without timely and consistent implementation, the G20’s 2027 targets are unlikely to be reached. Yet it also says that with proper collaboration, improvements can still be substantial. That is the real investment case for the sector.
For corporates, the commercial implication is immediate. Treasury teams increasingly need visibility not only into exchange rates and banking partners, but into the route a payment will take, the time it will settle, and the data it must carry to move cleanly through compliance filters.
For banks, the strategic choice is whether to remain utility providers inside legacy correspondent chains or become orchestration platforms that connect instant rails, FX, identity, compliance, and settlement in a single client experience. For central banks and policymakers, the test is whether the next generation of infrastructure improves inclusion and competition without fragmenting money itself. The industry is moving from digitising payments to redesigning the market structure that supports them.
Key Sources (This Article)
Bank for International Settlements, Enhancing cross border payments, state of play and way forward, 2025; Bank for International Settlements, cross border payments in a fragmenting world, 2026; Bank for International Settlements Innovation Hub, Project Nexus: enabling instant cross border payments, 2025; Bank for International Settlements Innovation Hub, Project Agorá, 2025; Bank for International Settlements, Leveraging tokenisation for payments and financial transactions, 2025; Bank for International Settlements, Project mBridge reached minimum viable product stage, 2024; International Monetary Fund, Cross border payments with retail central bank digital currencies, 2024; European Central Bank, Digital euro project pages and progress updates, 2025 and 2026; Bank of England, RTGS Renewal Programme and ISO 20022 materials, 2025; Federal Reserve, FedNow Service overview, 2023, and pricing update, 2024; World Bank, Remittance Prices Worldwide, 2025.
