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

BRICS Cross-Border Payments Latest News

• Ahead of the 18th BRICS Summit in New Delhi (September 2026), with India as Chair, member nations are pushing for new mechanisms to make cross-border payments faster and cheaper — including linking digital payment systems and central bank digital currencies (CBDCs). 
• Finance ministries and central bank representatives from BRICS countries met in Jaipur recently to discuss this financial cooperation

How Do Cross-Border Payments Currently Work?

• Sending money internationally isn’t a direct transfer — it travels through a chain of intermediaries called correspondent banks. 
• For example, if a South African importer pays an Indian exporter, the payment doesn’t move directly between the two countries’ banks. 
• Instead, it’s routed through a larger international bank (usually based in London or New York) that holds accounts with both.
• Since very few banks hold both rupees and rand directly, the payment gets converted rand → dollar → rupee, with the US dollar acting as a “vehicle currency” — even though no American party is involved in the trade at all.

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The Role of SWIFT

• Alongside the actual money, payment instructions also need to travel between banks — this is handled by SWIFT (Society for Worldwide Interbank Financial Telecommunication).
• SWIFT is a Belgium-based cooperative overseen by the National Bank of Belgium and G-10 central banks (including the US Federal Reserve).
• SWIFT works like a secure messaging network — a “post office” for payment instructions — used directly by over 11,000 institutions in more than 200 countries. 
• Smaller banks connect to it indirectly through larger ones, making SWIFT deeply embedded and hard to replace.

Why Are These Payments So Costly and Slow?

• Every intermediary bank in the chain charges a fee, and currency is converted twice, meaning forex margins are paid twice over. 
• A 2019 BRICS survey by Brazil found:
  • Forex margins of 2.5% for Brazilian respondents generally
  • Rising to 8.5% for payments involving Africa
  • Sometimes as high as 20% in certain cases
• While SWIFT’s “Global Payments Innovation” has helped speed up transactions, structural delays persist. 
• The Bank for International Settlements (BIS) found that active correspondent banking relationships fell by 20% between 2011 and 2018 — with Latin America worst affected (declines up to 30%) — even as overall payment volumes kept growing through this shrinking network.

Why Does BRICS Want to Change This System?

• For developing economies, heavy reliance on a few dominant currencies — the US dollar, euro, and yen — creates exposure to the monetary policies of the countries issuing them. 
• The 2024 BRICS report (under Russia’s chairmanship) argued that this system is effectively monopolised, driving up transaction costs.
• Building alternatives is hard, though — they require convincing a large number of banks and regulators to join. 
• There’s also a sanctions risk: several Russian banks were cut off from SWIFT in 2022 after Russia’s invasion of Ukraine, making other countries cautious about joining any alternative system that a sanctioned nation might use. 
• This is exactly why Russia has pushed hardest for alternatives, while others remain wary.

What Alternatives Are Being Explored?

• Direct linking of national payment systems — instead of routing through multiple correspondent banks, countries could connect their payment systems directly, in pairs. 
  • India has already done this with Singapore, linking UPI with Singapore’s PayNow for remittances. However, building such bilateral links one at a time doesn’t scale well.
• A shared hub model — Project Nexus, designed by the BIS and now run by a company set up by six central banks (including India’s RBI), aims to connect multiple countries’ payment systems through one common hub. 
  • It’s expected to go live only in 2027, and importantly, it is not a BRICS initiative.
• Central Bank Digital Currencies (CBDCs) — BRICS discussions extend this idea further, exploring the use of CBDCs (digital versions of currencies used for bank-to-bank settlement, not retail digital currency for individuals) exchanged on a common platform. 
  • Both sides of a currency swap would settle simultaneously, eliminating the risk of one party paying before the other, speeding up settlement and reducing capital banks need to set aside.
  • The only such platform running today is mBridge, built by BIS with the central banks of China, Thailand, Hong Kong, and the UAE. 
  • BIS handed it over to participants in October 2024. Notably, over 95% of mBridge’s settlement volume is in China’s digital yuan.
• The 2024 Kazan Declaration agreed to “discuss and study the feasibility” of an independent BRICS settlement system called BRICS Clear — but this proposal was notably absent from the following year’s Rio Declaration.

What Is India’s Position?

• India’s own proposal, reported in January, suggests member nations link their CBDCs specifically for trade and tourism payments. 
• Indian officials have been careful to frame this purely as a way to cut transaction costs and speed up settlements — not as an attempt to displace the US dollar, unlike some Russian and Brazilian proposals that go further toward reducing dollar dependence.
• This cautious framing may not be accidental. In November 2024, then US President Donald Trump threatened 100% tariffs on BRICS countries if they moved away from the dollar, plus a further 10% tariff on countries aligning with vaguely defined “anti-American” BRICS policies. 
• Though these threats weren’t carried out, they may explain why India has stuck to a narrower, cost-focused framing of the payment discussions.

Conclusion

• BRICS’s push for alternative cross-border payment mechanisms reflects developing economies’ shared concern over high costs and dollar dependence in global finance, though the group remains divided on how far to go — with Russia favouring dollar alternatives and India framing its proposals purely around efficiency. 
• As India hosts the 2026 summit, its cautious, cost-centric approach to CBDC linkages will likely shape how far BRICS’s payment ambitions actually progress.

Source: TH | FP