Features and prospects of cross-border linking of instant payment systems

The aim of this paper is to analyse the prospects of cross-border linking of instant payment systems. The core idea behind such linking is to make cross-border payments faster, more secure and cheaper for end-users, in line with the G20’s October 2020 plan to facilitate cross-border payments. This should be achieved by addressing persistent issues such as high costs, low speed, and insufficient transparency in these payments. Due to its comparative advantages, cross-border linking of instant payment systems is expected to replace the current model of cross-border payments via correspondent banking in the future. Compatibility between different payment systems requires that exchanged information are structured in a largely or entirely identical manner. The basis for ensuring compatibility lies increasingly in the use of electronic messages under the ISO20022 standard. A part of the paper is dedicated to the characteristics of the NBS IPS system, which relies on this message format, owing to which it is compatible with the European Central Bank’s TIPS system. The paper employs descriptive, comparative, and case-study methods to explore the features of current initiatives for cross-border linking of payment systems. It studies recent developments of this concept of linking, particularly paying attention to the characteristics of pan-European linking via the European Central Bank’s TIPS system, based on the SEPA payment scheme rules defined by the European Payments Council. The final section discusses the potential linking of the Serbian and pan-European instant payment infrastructures, which, in addition to technical interoperability between the two payment systems, requires Serbia to be part of the SEPA geographical area. At the end of 2024, a request to join this area was submitted to the European Payments Council with a response expected in March 2025.