Advances in instant payment networks, the expansion of ISO 20022, regional realignment of payment systems and the rise of new fraud channels are all coming together in a perfect storm that is redefining cross-border operations.

In a companion webinar to the “AFP Payments Guide: Seismic Shifts Are Coming for Cross-Border Payments,” underwritten by Wells Fargo, AFP brought together experts to discuss how major developments in cross-border payments may affect organizations in the near term.

Faster settlement is becoming more important across corporate use cases

While not every cross-border payment requires immediate settlement, the number of scenarios where timing directly affects business outcomes is expanding. Examples include large, time-sensitive transactions, such as acquisitions, major asset purchases or closings where multiple parties are waiting for confirmation.

“A big transaction where everybody's on the phone, and they want to see the money in the bank, that's when speed becomes necessary,” said Robert Whitaker, Senior Vice President, Corporate Finance, DHL.

Market expectations are another factor. In regions where instant payment infrastructure is widely adopted, suppliers and counterparties increasingly assume that payments will settle within minutes or hours. Meeting those expectations simply becomes part of maintaining the relationship.

“We're here to meet what the business needs, and if they need instant payments, then we're going to get them instant payments,” said Whitaker.

These developments influence liquidity management as well. When a payment can be initiated and completed within minutes, organizations can hold funds longer — even until the final day of a 30-day payment window. “Because I have instant payments, I have the ability to let my money work for me longer, and then make a payment still within the time period agreed to on the invoice,” said Andrew Gomez, Senior Advisor, Paylume. “And from the payee perspective, I like that I can see that money hitting my account instantly.”

ISO 20022 is improving the quality and clarity of cross-border transaction data

The shift to ISO 20022 is already making cross-border payments easier to track, reconcile and interpret. For example, a payer might accidentally split a payment into two installments, but because of the message fields, they can explain the purpose of each transfer. That way, when the recipient sees two payments arrive within a minute of each other, the context is immediately clear.

“That’s something you couldn’t necessarily do in the past,” said Gomez.

New regional payment models are redefining the meaning of “cross-border”

Cross-border payments are increasingly supported by interconnected regional networks rather than a single global model. Among the most notable:

• SWIFT GPI allows funds to settle in minutes or seconds and provides end-to-end tracking capabilities.
• SEPA Instant Credit Transfer (SCT-Inst) allows for euro payments in the SEPA area to settle in less than 10 seconds.
• International ACH Transfer (IAT) – Nacha has proposed allowing IATs to be eligible for same-day processing.
• Project Nexus – A new initiative from the Bank of International Settlements (BIS) that aims to connect domestic instant payment systems to enable seamless, cross-border transactions in less than one minute.
• Stablecoins provide near-instant settlement across borders with minimal fees and offer potential use cases in countries with trapped cash.
• PromptPay-PayNow Linkage connects domestic real-time payments systems in Thailand, Singapore and Malaysia (DuitNow was added later), enabling low-value, near-instant payments between countries via QR codes.

Fraud patterns are evolving alongside instant and irrevocable payment rails

As cross-border payments accelerate, so do fraudsters. “Fraud will always go where the payments are,” said Andrew Deichler, Director, Enterprise Payments Practice, AFP.

The greatest vulnerabilities don’t stem from the rails themselves but from upstream processes, especially vendor onboarding and changes to banking instructions. “Where the real risk lies is not in the method of payment so much as the setting up of the information to make the payment,” said Whitaker.

With a greater understanding of these risks, the focus is shifting to prevention over correction:

• Payment data is becoming more usable for fraud detection thanks to ISO 20022’s structured fields.
• Confirmation or verification of payee services allows organizations to confirm whether an account truly belongs to the intended recipient before releasing the funds.
• Centralized fraud detection capabilities within payment networks are gaining traction, particularly in ACH systems where the operator sees both sides of a transaction and can detect patterns individual banks cannot. “We're seeing this being built in more and more systems around the world,” said Gomez.

Geopolitical and sovereignty trends are influencing payment infrastructure

“A big question for American businesses over the next several years is how U.S. foreign policy could impact cross-border payments,” said Deichler. With the more isolationist stance of the current administration, which has been imposing higher tariffs on big trading partners such as Canada, Mexico and China, payments between countries could be affected if foreign relations remain tense or worsen.

Even prior to the current administration, several new payment networks were under development to reduce reliance on the U.S. dollar or avoid exposure to foreign sanctions. Examples include South America’s SML, Sub-Saharan Africa’s TCIB, the Buna platform in the Middle East and North Africa, and coordinated systems between Russia, China and India.

Europe has also been pursuing greater payment sovereignty, most recently through the European Payments Initiative. The goal is to create a mobile payment app that can perform person-to-person payments as well as some e-commerce consumer-to-business payments.

“It’s a concern the Europeans have that two people in Europe cannot make a payment to one another without using an American network,” said Gomez. “For example, whenever I leave Germany, I have to use an American-branded card to make a payment in Spain.”

What these developments suggest is that treasury and enterprise payments teams may encounter more regional variation in payment rules, standards and routing. Even organizations that are not currently sending many cross-border payments could feel the effects through suppliers, partners or subsidiaries.

“Corporate treasury and enterprise payments teams have to be agile right now,” said Deichler. “With such rapid fluctuations happening, you're going to need to pivot quickly — possibly at a moment's notice — as more of this happens.”

Remaining vigilant in a rapidly evolving payments landscape

The combined effect of these shifts is creating a cross-border landscape quite different from the one treasury and enterprise payments teams operated in just a few years ago. In fact, changes are happening so quickly that even recent guidance may require updates sooner than anticipated.

“Companies can't afford to rest on their laurels,” said Deichler. “They need to focus on this and make sure they're paying attention to what's going on around the globe, especially in the markets they operate in.”

Interested in learning more about cross-border payments? Fill out the form below to download AFP Payments Guide: Seismic Shifts Are Coming for Cross-Border Payments,” underwritten by Wells Fargo.