Cross-border payment landscape in Asia: Initial findings in collaboration with Money20/20
The future of cross-border payments in Asia is set to undergo a significant transformation, according to a new report titled "How Will Asia's Money Move In The Future? 2025's View Of 2035", published this week in partnership with Money20/20.
The report predicts that the share of global cross-border payments coming from the Asia-Pacific region will increase from 32.2% in 2024 to 36.8% in 2032, signifying a substantial growth in the region's prominence in the global financial landscape.
Central Bank Digital Currencies (CBDCs) and blockchain technology are expected to play a pivotal role in this transformation. China, for instance, is already trialling cross-border payments using CBDCs like the digital yuan with partners including Saudi Arabia and the UAE. The adoption of such digital currencies could foster interconnectivity in global financial infrastructure, address longstanding inefficiencies in cross-border settlements, and potentially reduce costs by up to 50%.
Industry initiatives, such as Project Guardian led by organizations like ISDA and Ant International, emphasize the use of tokenised bank liabilities combined with shared ledger technology to facilitate faster, safer, and more efficient cross-border payments. These innovations could reduce settlement times from days to minutes or seconds, thereby enhancing the experience for businesses and clients.
Enhanced interoperability between various digital payment systems, CBDCs, and tokenized asset platforms is also crucial for the success of this transformation. Collaborative trials involving multiple central banks, such as Japan, the US, and Europe, illustrate a global move towards interoperable cross-border digital payment infrastructures.
Establishing sector-wide agreed frameworks is essential to support large-scale adoption of new technologies, enhance security, and ensure compliance with financial regulations. This will help address risks and build trust among users, regulators, and financial institutions across different countries in Asia.
Regulatory policy and consumer habits were also identified as key factors influencing the future of cross-border payments infrastructure in Asia. By 2035, 93% of those surveyed expect significant or moderate change in Asia's payments infrastructure, with 88% expecting interoperability to be either very or extremely important.
Digital wallets and real-time payments systems are also expected to play a significant role, with 59% and 66% of respondents, respectively, identifying them as important for Asia's payment infrastructure. The flows are expected to grow significantly, reaching $23.8tn in 2032.
The full report, including additional analysis across technology, policy, companies, and countries, can be downloaded from Money20/20's website. Many experts identify multiple technologies that they see playing a key role in the future of cross-border payments infrastructure in Asia, beyond real-time payments systems and digital wallets.
In conclusion, the future of cross-border payments in Asia is expected to be revolutionized through widespread adoption of CBDCs, tokenized bank liabilities on shared ledgers, and enhanced interoperability, underpinned by strong collaborative frameworks. These developments will lead to significantly faster, cheaper, and more efficient cross-border payments that operate beyond traditional correspondent banking networks and reduce dependence on dollar transactions.
- To effectively capitalize on the predicted growth in cross-border payments in Asia, it's crucial to understand the market sizing, particularly in terms of the potential cost savings from adopting technologies like Central Bank Digital Currencies (CBDCs) and blockchain.
- As the finance sector in Asia continues to evolve, investments in technology and innovations such as tokenized bank liabilities, enhanced interoperability, and digital wallets could play a significant role in sizing the future business opportunities in the cross-border payments market.
