As global trade patterns shift and businesses re-evaluate their supply chains and international operations, companies are actively seeking smarter ways to move money globally, making innovation in cross-border payments more critical – and more valuable – than ever.

B2B cross-border payment volumes reached $32tn in 2024, and as of 2023, banks handled 92 per cent of B2B cross-border transactions. As businesses seek more efficient solutions, banks face significant challenges in adapting to the demands of modern commerce.

The bottlenecks in today’s system

“While most of the world and the applications in our daily lives operate 24/7/365, this is not yet true of the global banking system,” says Andrew C. Haskell, Global Head of FX Solutions, Treasury Services at BNY. “This is delaying our collective march towards an ‘always-on and always-available’ cross-border payment environment. As financial systems and banking applications have accelerated in domestic markets around the world, clients are increasingly expecting a similar level of acceleration for cross-border payments.”

Many banks, when receiving a message via SWIFT – the network that transmits transaction instructions between financial institutions – must verify that the corresponding funds have been credited to their nostro account. This verification does not occur in real time and is often restricted to standard business hours. In addition, SWIFT messages are processed sequentially: one bank completes verification and security checks before relaying the transaction instructions to the next institution. As a result, clearing a transaction can take days.

“In our conversations with banks, we hear that 15 to 20 per cent of cross-border payments are interrupted by exceptions – errors such as mistyped routing instructions, formatting glitches or incomplete information,” says Rasika Raina, Head of Product for Mastercard Move. “These disruptions not only delay processing but also create friction for customers and operational strain for institutions.”

Adding a layer of uncertainty, the sending bank often loses visibility once the instructions cross overseas. The system also drives up costs. For example, payment failures can incur extra fees for customers and operational expenses for banks.

“Inconsistencies expressed through local clearing requirements, such as physical documentation requests, also delay the processing of transactions and introduce manual efforts, thus adding friction and frustration for sender and receiver alike,” Haskell says.

An even bigger issue for banks is liquidity. A large bank might have hundreds of correspondent relationships with millions of dollars of funds parked in nostro accounts across the globe. Managing that liquidity adds to overheads.

Because most banks process a huge volume of transactions every day, bottlenecks and inefficiencies can compound rapidly. To serve their customers better, banks need a solution that automates data routing and transaction finalisation, reducing errors, freeing liquidity and allowing clearing to proceed in near real time.

“There’s a huge opportunity to bring the intelligence and automation of domestic real-time payments to the global stage,” says Raina. “Flexible, modular solutions that integrate with existing infrastructure like SWIFT, standards like ISO 20022 and services like Swift GPI – while supporting emerging technologies such as digital assets and artificial intelligence – enables banks to innovate without disrupting core operations.”

A smarter way forward

In an emerging approach, banks augment their systems with a SWIFT-based digital overlay that automatically coordinates validation, clearing and, if desired, settlement. This type of system sends information to all parties – the beneficiary bank and each correspondent – simultaneously, running validations on data at each bank to identify errors and flag problematic payments.

Realising this concept at scale, Mastercard Move Commercial Payments (MMCP), a rules-based, closed-loop digital orchestration layer, enhances the capabilities of the correspondent banking system to allow near-real-time cross-border payments. Because the system is automated, clearing can be completed almost instantly, even after hours or on weekends.

By streamlining cross-border payments into a single approach for all cases, the solution lowers costs and overhead. It also helps banks optimise liquidity – they can see their settlement positions at any given moment, so they are free to fund settlement accounts only as needed. In addition, to manage risk, banks have the option to customise advanced risk matrices and have better control over which transactions they receive.

“Connecting banks and networks more effectively will make the payment process smoother and safer for everyone involved,” Raina says.

Helping banks deliver what businesses need

Mirroring advances in real-time domestic payments, MMCP allows banks to enhance their service offerings to corporate customers by enhancing the speed, transparency and reliability of cross-border transactions. End-to-end visibility into payment status and fees reduces uncertainty around outcomes, while automatic clearing processes can minimise exceptions and resolve them quickly.

“Businesses are looking for clarity as well as speed,” Raina says. “They need to know where the payment is, when it will arrive, so they can manage cash flow and relationships effectively.”

This consistency helps corporates optimise working capital and strengthen buyer-supplier relationships. Smaller enterprises in particular benefit from avoiding the high costs of failed and returned payments.

“We’re helping banks deliver the kind of speed and certainty their corporate customers now expect,” Raina says. “Ultimately, it’s about building more trust and efficiency into a system that powers the global economy.”