Trends in Payments – Cross-border and Using New Services

Above we advertise our Payments and New Financial Solutions online conference on 7-9 February. To put this into context, on 13th January 2022, the Pan African Payment and Settlement System (PAPSS) platform was launched by the Africa Export-Import Bank (Afreximbank), in collaboration with African Union (AU) and African Continental Free Trade Area (AfCFTA). The platform is a cross-border financial market infrastructure enabling payment transactions across Africa, to ease trade challenges in a continent with over 40 currencies. According to the Secretary-General of the AfCFTA, PAPSS will enable Africa to reduce reliance on third currencies (such as the US$), and it has the potential to boost intra-Africa trade significantly. The PAPSS CEO will be speaking at our event (see above).

In another example, central banks in Australia, Singapore, Malaysia, and South Africa have announced that they will conduct a cross-border payments trial using different central bank digital currencies (CBDC) to assess if this allows transactions to be settled cheaply and easily. Many governments and central banks around the world are exploring the use of CBDCs, which are digital forms of existing currencies. Some, like China, are trialing retail-focused CBDCs designed to replicate cash in circulation, while others are considering using so-called wholesale CBDCs to improve the internal workings of their financial systems. This latest project aims to develop prototype shared platforms for cross-border transactions using multiple CBDCs, according to a statement from the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore, the South African Reserve Bank (SARB), and the Bank of International Settlement’s Innovation Hub, which is leading the scheme. These platforms would enable financial institutions to transact directly with each other in CBDCs, which could eliminate the need for intermediaries and reduce the time and cost of transactions.

And just to put things in perspective, the Bitcoin network processed an estimated average of $489bn per quarter in 2021 — over $150bn more than PayPal.

In another development, Amazon has announced recently that it will stop accepting Visa cards on its UK site. Amazon has pointed out that banking interchange fees can be costly for ecommerce retailers because expensive payment methods like credit cards lead to customers making fewer transactions and abandoning shopping carts. Many ecommerce platforms in the USA and Europe are considering moving to alternatives like ‘buy now, pay later (BNPL). Research has shown that customers tend to buy more often when given no-interest or interest-free payment alternatives, and providers like Affirm and Afterpay are poised to reap the benefits of this shift.