At a November 2020 summit, a coalition of the world’s largest economies, the Group of Twenty (G20), tabled a roadmap aimed at enhancing international retail, wholesale and remittance transactions. By 2021, working with the Financial Stability Board (FSB),
the G20 issued a set of qualitative targets – across access, cost, speed, and transparency – to guide financial institutions in their journeys. These targets are scheduled for completion by 2027.
Access, cost, speed, and transparency
The G20’s
targets cover the following areas of cross-border payments:
1. Access
By 2027, all end-users should have at least one infrastructure or provider option available for sending and receiving cross-border electronic payments.
2. Cost
Within retail, the global average cross-border payment cost should be no more than 1%, with no corridor seeing average costs above 3%.
In addition, the global average cost of sending $200 in remittance is to be no more than 3% by 2030, with no corridors exceeding a 5% cost.
3. Speed
75% of cross-border payments, across wholesale, retail and remittance, should provide fund availability to recipients within one hour from the time the payment is initiated.
4. Transparency
All payment service providers (PSPs) should offer payers and payees, at a minimum, the following three pieces of information: total transaction cost (showing all relevant charges), expected time to deliver funds, and payment status.
If these targets are met by the G20’s deadline, cross-border payments will become faster, cheaper, more transparent, and more inclusive – bringing innumerable perks for businesses, economies, and global trade.
Progress toward the G20 targets
In the last quarter of 2024, the FSB published its annual key-performance-indicator (KPI) and progress
report. According to the FSB, at the global level, “KPIs indicate that more progress will be needed to meet the targets across all market segments”, and that significant challenges remain.
In the wholesale space, the speed of cross-border payments decreased slightly, due to “technical factors unrelated to underlying settlement times.” For example, the “share of payments over SWIFT crediting funds within one hour and one business day decreased,
to 50.6% (-3.2 percentage points, from 2023) and 92% (-0.7 pp), respectively.” Access to wholesale cross-border payments remained “unchanged, at 92.4%” of countries having at least three provider options.
On the retail side, at the global level, the “2024 cost KPIs showed no improvements, with no use case meeting the target cost of 1%,” claims the report. In many regions and use cases, “costs were higher in 2024 than in 2023.” The speed of retail payments
also declined year-on-year (YOY), with the “share of payment services by PSPs settling within one hour and one business day from initiation decreasing to 33.5% (-0.7 pp) and 69% (-5 pp), respectively.” Positively, transparency improved across all use cases,
with business-to-business (B2B) transactions experiencing the most significant percentage increase, while peer-to-peer (P2P) enjoyed the highest transparency levels overall.
Remittances fared not much better. The average cost for sending $200 in remittances increased slightly from 2023, whereas the cost for $500 remained unchanged. The FSB states that in 2024, “remittances were not faster on average than in 2023, with 54% of
services making funds available to recipients in one hour and 76.6% in one business day.” Fortunately, the transparency story was, again, brighter: “The breakdown of total fees and FX margin almost reached the target of 100%,” notes the report.
The reasons for this less-than-optimal picture are complex and varied, though underlying many of the issues was a need to source and funnel investment into further technological development. For more information on how the market is addressing G20 targets,
read Temenos’ recent impact study, in partnership with Finextra, on cross-border payments.
Fulfilling the roadmap: Some practical steps
Fortunately, there are some concrete steps financial institutions can take to fulfil the G20’s objectives before the end-2027 deadline:
Access
- Offer 24/7 availability;
- Provide at least one option for sending or receiving payments; and
- Ensure affordability.
Cost
- Automate payments;
- Settle disputes efficiently via digital tools;
- Rationalise tech setups;
- Avoid penalty charges with always-on compliance; and
- Remove unnecessary silos and encourage interoperability with
application programming interface (API)s.
Transparency
- Increase field size of financial messages;
- Enhance the richness, structure, and granularity of end-to-end payments data;
- Increase remittance information; and
- Migrate to Swift’s ISO 20022.
Speed
- Introduce cloud and real-time capability;
- Streamline validation;
- Automate repairs; and
- Optimise straight-through processing.
Beyond the G20 targets
Though not enforceable by legislation, the G20’s targets are a recognition among the world’s most influential economies of the need to improve cost, speed, access, and transparency in wholesale, retail, and remittance transactions – for the benefit of the
entire ecosystem.
Institutions that do invest the resources, time, and funds to update their technology platforms before 2027, will reap benefits beyond mere G20 roadmap compliance. They will unlock new revenue streams, opportunities, and achieve unprecedented levels of end-user
satisfaction.