BRICS, and the future of cross-border payments

Source: The post “BRICS, and the future of cross-border payments” has been created based on “BRICS, and the future of cross-border payments” published in “Business Line” on 17th September 2026.

UPSC Syllabus:  GS Paper 2- International Relations

Context: BRICS has been working towards greater use of national currencies and improved cross-border payment mechanisms since the Ufa Declaration of 2015. A Payment Task Force of BRICS central banks was established in 2020, and the initiative was formally called the BRICS Cross-Border Payments Initiative at the Kazan Summit in 2024. India has consistently maintained that it is not pursuing de-dollarisation or a common BRICS currency.

Reason behind Cross-Border Payments gaining importance

1. The importance of efficient cross-border payments has increased because intra-BRICS exports reached $1.17 trillion in 2024, which was 13 times their level in 2003.
2. India’s trade with BRICS countries crossed $417 billion in FY26, although India recorded a trade deficit of about $226 billion.
3. Cross-border payments continue to face delays because of correspondent banking chains, different time zones, batch processing and largely manual compliance checks.
4. According to the Financial Stability Board’s 2025 report, fewer than 45 per cent of global B2B payments were credited within one business day, highlighting the need for faster systems.
5. BRICS countries now have large-scale domestic fast-payment systems such as UPI in India, Pix in Brazil, SBP in Russia, QRIS in Indonesia and Aani in the UAE, creating a technological base for interoperability.

Major Developments

1. The New Delhi Declaration encourages interoperability of payment and messaging channels and greater settlement of trade in local currencies while respecting the national priorities of member countries.
2. The Declaration recognises that there is no one-size-fits-all approach to cross-border payments and does not establish a common BRICS payment system or common settlement currency.
3. The proposed Russian settlement and depositary infrastructure has remained at the technical workshop stage rather than becoming a formal decision.
4. The Jaipur Consensus has proposed studying an invoice-discounting mechanism to support MSME exporters.
5. The BRICS Multilateral Guarantees initiative is moving towards pilot transactions, which can facilitate cross-border trade.
6. The New Development Bank has been encouraged to expand its lending in local currencies.

Opportunities for India

1. Greater interoperability can make cross-border payments faster, cheaper and more transparent for Indian businesses and individuals.
2. International expansion of UPI connectivity can strengthen India’s position in the global digital-payment ecosystem.
3. Faster payments can particularly benefit MSME exporters by improving their cash flows and reducing payment-related delays.
4. Direct connectivity between payment systems can reduce dependence on multiple correspondent banking intermediaries.
5. Local-currency settlement can facilitate bilateral trade where suitable mechanisms exist for managing accumulated currency balances.
6. The growth of cross-border payments can create opportunities for Indian banks and regulated fintech companies to develop innovative payment solutions.
7. Common technical standards among BRICS countries can make cross-border transactions more accessible, secure and transparent.

Challenges

1. BRICS countries have different regulatory frameworks, currency-convertibility regimes, payment infrastructures and financial systems, making a single common system difficult.
2. Unequal trade balances can create difficulties in local-currency settlement because one country may accumulate large balances of another country’s currency.
3. India’s experience with rupee settlement for Russian oil demonstrated this problem when surplus rupees accumulated faster than they could be utilised.
4. Cross-border payments involve different requirements for KYC, settlement, reporting, data sharing and compliance, which require coordination between countries.
5. Retail payments between travellers and consumers, exporter payments and central-bank settlements involve different participants, risks and technical requirements and therefore cannot necessarily be addressed through one mechanism.
6. Wholesale transactions between central banks may require specialised systems such as CIPS and mBridge, rather than retail fast-payment platforms.
7. Geopolitical factors, including Russia’s exclusion from SWIFT after 2022, add complexity to discussions on alternative payment arrangements.

Way Forward

1. BRICS should adopt a bilateral and layered approach rather than attempting to immediately establish one common payment system.
2. BRICS countries should develop common standards for messaging formats, QR interoperability, data exchange, security and dispute resolution.
3. Domestic fast-payment systems should be connected where there is sufficient trade volume, regulatory compatibility and mutual trust.
4. India’s UPI-PayNow linkage with Singapore provides an example of how bilateral payment connectivity can be developed.
5. The proposed UPI-Aani linkage with the UAE and QRIS-UPI linkage with Indonesia can further expand India’s international payment connectivity.
6. Local-currency settlement should be accompanied by mechanisms that provide productive avenues for surplus currency balances, including appropriate investment options.
7. Regulators should establish common safeguards while allowing banks and fintech companies to compete on speed, cost and transparency.
8. India can build on its 2023 framework for cross-border payment aggregators, which provides regulatory requirements relating to KYC, settlement and reporting.
9. The New Development Bank can play a greater role in local-currency lending, thereby supporting trade and investment among member countries.

Conclusion: The future of BRICS cross-border payments is likely to depend more on interoperability, common standards and bilateral connectivity than on the creation of a common currency. BRICS can provide a broad common template while allowing individual countries to develop arrangements according to their specific economic and regulatory conditions. The ultimate measure of progress would be whether an Indian exporter can receive payment from a buyer in another BRICS country as quickly, cheaply and transparently as from a domestic customer.

Question: BRICS is moving towards greater interoperability in cross-border payments without pursuing a common currency. Discuss the opportunities, challenges and the way forward for India.

Source: Business Line