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In recent decades, the world has witnessed a remarkable surge in cross-border payments, driven by the globalisation of trade, capital and migration flows. Global payments are expected to skyrocket from USD 190 trillion in 2023 to a staggering USD 290 trillion by 2030.[1]
Despite such spectacular growth, cross-border payments remain prohibitively expensive and sluggish, leaving the most vulnerable behind. While domestic payments are becoming instant and digital, cross-border payments have yet to benefit from the transformative power of digital technologies. Fees for international payments currently average 1.5% for corporates and as much as 6.3% for remittances. And it can take up to several days for these payments to reach their recipient.[2]
This raises three pressing issues.
The first is the impact on economic integration. Costly and slow payments hinder integration and growth. The costs and complexity of cross-border payments have been shown to deter many small and medium-sized enterprises from expanding across borders.[3]
Second, the world’s most vulnerable populations pay disproportionately more than others. Migrant workers, who support one in nine people globally through remittances, can face exorbitant costs when sending money home.[4] In sub-Saharan Africa, the cost of sending remittances abroad reaches 8.4%.[5] With remittances amounting to USD 626 billion in 2022, even a tiny 1 percentage point reduction in fees would leave those most in need with USD 6 billion in their pockets every year.[6]
Third, alternative players have identified these inefficiencies as a business opportunity, but their solutions carry significant risks. Unbacked cryptos are intrinsically volatile and akin to gambling.[7] Stablecoins cannot guarantee convertibility at par at all times, making them prone to runs. And major technology companies may seek to create closed-loop payment solutions, leading to fragmentation and a high concentration of market power. Facebook’s Diem project initially looked like a potential candidate for such a global payment solution. And more recently PayPal USD was launched – a stablecoin issued by a global tech company with over 400 million users worldwide.
We therefore need to provide a safer and easily accessible alternative that makes global payments cheaper, faster and more transparent...
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