RTGS Global looks to transform cross-border payments
The G20 has called for renewed efforts to enhance slow and costly international payments. The founder of Worldpay and ClearBank may have the answer.
At the bottom of the homepage of RTGS Global’s website there is a counter, turning over the cost of inefficiencies in the international payments system – which founder Nick Ogden calculates at $85,617 per second, or $2.7 trillion per year.
These are the sunk costs for businesses around the world of shuttling payments between networks of correspondent banks, sometimes funding inadequate balances in their nostro and vostro accounts. They link to domestic real-time gross settlement systems, occasionally over multiple legs between geographies where the opening times for these systems do not overlap, often chasing up failed payments.
In July, Jon Cunliffe, deputy chair of the Bank of England and chair of the BIS committee on payments and market infrastructure, laid out the problem, along with the G20’s call to prioritize enhancing cross-border payments.
“It can take up to 10 days for a [cross-border] payment to get through and it can cost ten times as much as it would for a domestic payment,” Cunliffe points out. “Payments between two countries can involve five or six different banks. Each one will charge a fee and the payment can break down at each stage. In some cases, the technology, the messaging formats, go back 100 years to the development of the telex machine.”