BRICS Cross-Border Payments: India’s Push for Faster and Cheaper Transactions

Context

Ahead of the 18th BRICS Summit (New Delhi, September 2026), members are exploring faster and cheaper cross-border payments through national payment-system links and CBDCs.

About Cross-Border Payments

1. International payments usually pass through correspondent banks, which act as intermediaries between banks of different countries.
2. Since direct currency conversion may not always be available, a vehicle currency, mainly the US dollar, is often used, adding forex conversion costs, intermediary charges and settlement delays.
3. SWIFT (Society for Worldwide Interbank Financial Telecommunication) provides a secure network for sending payment instructions between banks, while the actual transfer of funds takes place through the banking system.

Role of SWIFT

1. SWIFT, headquartered in Belgium, is a secure messaging network used by over 11,000 financial institutions in 200+ countries to send standardised payment instructions.
2. It does not transfer money itself; funds move through banks and correspondent banking arrangements.
3. Its wide global network makes it difficult to replace, and it is overseen by the National Bank of Belgium and G-10 central banks.

Why Reform Is Needed

1. High Costs: Multiple intermediaries and currency conversions increase transaction fees and forex margins. A 2019 BRICS survey reported margins of 2.5% for Brazilian payments, 8.5% for Africa-related payments and up to 20% in some cases.
2. Shrinking Banking Network: Bank for International Settlements (BIS) reported a 20% decline in active correspondent banking relationships (2011–2018) despite rising payment volumes.
3. Dollar Dependence: Reliance on the US dollar, euro and yen exposes developing economies to monetary and financial conditions in the countries issuing these currencies.

BRICS Alternatives Under Discussion

1. National Payment System Linkages

• Direct Connectivity: Countries can link their instant-payment systems to reduce reliance on correspondent banks.
• India–Singapore: UPI–PayNow already enables cross-border retail payments.
• Limitation: Bilateral links become difficult to scale as more countries join.

2. Project Nexus

• Common Platform: Developed by the BIS, it aims to connect multiple national instant-payment systems through a single platform.
• Timeline: Expected to become operational in 2027.

3. CBDC-Based Settlement

• Cross-Border Use: BRICS is exploring CBDCs for international trade and settlement.
• Key Benefit: Simultaneous settlement can reduce settlement risk, transaction time and banks’ liquidity needs.
• mBridge: A BIS-supported multi-CBDC platform involving China, Thailand, Hong Kong and the UAE; over 95% of its settlement volume has been in China’s digital yuan.

4. BRICS Clear

• Proposal: The 2024 Kazan Declaration called for examining the feasibility of BRICS Clear, an independent settlement mechanism.
• Status: Its absence from the subsequent Rio Declaration reflects differences among BRICS members over the extent of alternative financial infrastructure.

India’s Position

1. CBDC Interoperability: India supports linking BRICS CBDCs for trade and tourism payments to enable faster and cheaper settlements.
2. Efficiency Focus: India’s approach aims to reduce transaction costs, intermediaries and settlement time.
3. Pragmatic Approach: India focuses on payment efficiency and financial diversification, rather than explicitly pursuing de-dollarisation.

Significance for BRICS

1. Lower Costs: Fewer intermediaries and currency conversions can reduce payment costs.
2. Faster Payments: Interoperable digital systems can enable quicker settlement.
3. Trade & Inclusion: Easier payments can support intra-BRICS trade, remittances and small businesses.
4. Financial Resilience: Multiple payment channels can reduce dependence on dominant currencies and strengthen strategic autonomy during financial or geopolitical disruptions.

Challenges

1. System Compatibility: Different payment systems, currencies, technical standards and regulations must be made compatible.
2. Limited Participation: The system needs wide adoption by countries and banks to become effective.
3. Regulatory Differences: Variations in AML/CFT (Anti-Money Laundering and Countering the Financing of Terrorism), capital controls, data protection and payment rules can hinder integration.
4. Currency & Geopolitical Risks: Local-currency settlement may face exchange-rate risks, while sanctions concerns—especially after Russia’s exclusion from SWIFT in 2022—may discourage participation.
5. Strategic Differences: BRICS members differ on whether the focus should be payment efficiency or reducing dollar dependence.
6. Cybersecurity: Greater digital connectivity increases risks related to cyberattacks, data protection and operational failures.

Way Forward

1. Build Common Standards: Promote common technical, regulatory and cybersecurity standards for seamless payment connectivity.
2. Scale UPI Globally: Expand UPI–PayNow-type linkages and use India’s digital-payment expertise to lead wider BRICS payment integration.
3. Promote CBDC Cooperation: Develop CBDC interoperability for trade and remittances while ensuring secure and efficient settlement.
4. Support Local-Currency Payments: Encourage local-currency settlement where viable, reducing unnecessary dependence on a single vehicle currency.
5. Ensure Open Architecture: Support an interoperable and inclusive payment system rather than fragmented alternatives, strengthening India’s strategic autonomy and financial leadership.

Conclusion

BRICS seeks to make cross-border payments cheaper, faster and more resilient. India’s focus on CBDC interoperability and payment efficiency offers a pragmatic path towards greater financial resilience and strategic autonomy.

Additional Information:

1. BRICS

• Origin: BRICS began as BRIC (Brazil, Russia, India and China); South Africa joined in 2010, making it BRICS.
• Purpose: It promotes South-South cooperation, economic coordination and greater representation of emerging economies in global governance.
• Key Institutions: The New Development Bank (NDB) finances infrastructure and sustainable-development projects, while the Contingent Reserve Arrangement (CRA) provides support against short-term external liquidity pressures.
• India’s Relevance: BRICS provides India a platform for strategic autonomy, Global South cooperation and reform of global financial institutions.

2. BIS — Bank for International Settlements

• It is an international organisation that serves as a bank for central banks and promotes monetary and financial stability.
• Role: It provides a forum for central-bank cooperation and supports research and innovation in the financial system.
• Payment Systems: Its Innovation Hub has developed projects such as Project Nexus for connecting national instant-payment systems and mBridge for exploring CBDC-based cross-border payments.

3. CBDC — Central Bank Digital Currency

• It is a digital form of a country’s fiat currency issued and backed by its central bank.
• Difference from Cryptocurrency: Unlike cryptocurrencies such as Bitcoin, CBDCs are centralised, sovereign-backed and have stable value.
• India: India’s CBDC is the e₹ (Digital Rupee), issued by the RBI.
• Cross-Border Potential: CBDCs can enable faster settlement, lower costs and simultaneous exchange of currencies, making them relevant for BRICS payment integration.

FAQs

Q1. Why is BRICS seeking alternative cross-border payment mechanisms?
Ans. To reduce transaction costs, settlement delays and dependence on correspondent banks and dominant currencies.

Q2. What is the role of CBDCs in cross-border payments?
Ans. CBDCs can enable simultaneous currency settlement, reducing settlement risk, transaction time and liquidity requirements.

Q3. What is Project Nexus?
Ans. It is a BIS-developed platform to connect national instant-payment systems through a common network. It is not a BRICS initiative.

Q4. What is India’s approach to BRICS payment reform?
Ans. India favours CBDC interoperability and payment efficiency, focusing on lower costs rather than explicitly pursuing de-dollarisation.