Panetta urges public-private action to enhance cross-border payments

Cost and speed remain the most pressing issues for end users in cross-border payments, directly impacting transparency and access.

Despite some encouraging progress, end-to-end speed, particularly in retail payments, still falls short.

Key factors contributing to these bottlenecks include outdated domestic infrastructures, limited access to payment systems, and insufficient standardization and automation in areas like anti-money laundering and combating the financing of terrorism.

Foreign exchange (FX) conversion fees are a significant source of high costs, driven by limited liquidity in local currency markets, over-reliance on major reserve currencies, and market concentration among a few dominant players, which collectively weaken competitive pressure and transparency in retail pricing.

Panetta outlined five areas for concerted action to improve cross-border payments.

First, strengthening wholesale payment infrastructures by extending operating hours and expanding the global settlement window is critical.

Second, jurisdictions must advance harmonized rules for data collection, storage, and sharing, with global adoption of ISO 20022 as a foundational step.

Third, payment service providers should automate compliance checks, leveraging richer data and emerging technologies to enhance speed without compromising security.

Fourth, greater business interoperability is needed, allowing participants to connect through single interfaces or common schemes.

Fifth, increased transparency on fees, FX rates, and execution timelines is essential to foster competition and inform end users.