What are we doing to help individuals and businesses make faster and cheaper cross-border payments?

The purpose of Bank Overground is to share our internal analysis. Each bite-sized post summarises a piece of analysis that supported a policy or operational decision.
Published on 25 September 2020
Improving cross-border payments will benefit individuals, businesses, and the wider economy. That’s why we are supporting international efforts to enhance cross-border payments and renewing our Real-Time Gross Settlement payments infrastructure.

Cross-border payments are transactions where the sender and the recipient are in different countries. They are typically more costly and slower than domestic payments as they involve more firms, time zones, jurisdictions and regulations.

Improved cross-border payments would make international trade more efficient, thereby supporting economic growth and global development. Cross-border payments are also critical for migrant workers who send money overseas.

We are working with other central banks to enhance cross-border payments. The G20 has made this a priority for 2020, supported by the Financial Stability Board and the Committee on Payments and Market Infrastructures (international bodies that support financial stability). The culmination of this work will be a roadmap published in October 2020 to pave the way forward to enhance cross-border payments. This will build on previous workfootnote [1] that identified a number of barriers to more effective cross-border payments and steps to address them.

One of these barriers is the lack of overlapping operating hours between central bank payment systems (Chart A). Extending the operating hours so there is greater alignment of key payment systems in different jurisdictions and time zones will help to make cross-border payments faster. Delays can arise when the receiving system is closed when a payment is sent.

Chart A Limited overlap in the business day operating hours of key payment systems is a barrier to efficient cross-border payments

Operating hours converted to GMT


Sources: Central bank websites and Bank calculations.

Reducing delays in cross-border payments can reduce the amount of money tied up in payment systems while transactions are being processed. This in turn reduces the cost of providing these payments, as firms need to put aside less capital to cover these transactions.

In the UK, we are renewing our Real-Time Gross Settlement (RTGS) service, which holds accounts for banks, building societies and other institutions. The balances in these accounts are used to move money in real-time between account holders to deliver final and risk-free settlement for payments within the UK.

RTGS is currently available for 12 hours each business day. The renewed service will have the capability to settle payments during an extended operating window, and thus in time support faster and cheaper cross-border payments. We will continue to monitor industry demand for extensions to RTGS operating hours before implementing any changes.

This post has been prepared with the help of Lisa Gupta and Juliet Dowley.

Share your thoughts with us at BankOverground@bankofengland.co.uk

  1. Details of earlier work, including the barriers identified, are set out in an April 2020 report by the Financial Stability Board and a July 2020 report by the Committee on Payments and Market Infrastructures.