How Cross-Border Payments (LRS, SWIFT & CBDCs) Are Evolving in 2025
💰 Cross-Border Payments in 2025: Why They’re Still Expensive & Slow
Cross-border payments remain frustratingly inefficient despite the fintech boom. Whether you’re an Indian student paying tuition via LRS, a global business making international remittances, or a fintech company optimizing SWIFT transactions, you’ve likely encountered:
✔ Hidden fees & unfavorable forex rates
✔ Slow settlements (often taking 2–5 days)
✔ Opaque banking processes with no tracking
💡 With real-time domestic payments (like UPI in India) becoming instant, why is international money movement still broken? Let’s break it down.
📊 The Cross-Border Payment Bottleneck: SWIFT, LRS & Banking Delays
Despite fintech advancements, most international transactions still rely on outdated banking rails.
1️⃣ Why SWIFT Transfers Are Expensive & Slow
Correspondent banking fees: SWIFT transactions often pass through multiple intermediary banks, each taking a cut.
2–5 day processing time: Unlike UPI, which is instant, SWIFT-based transfers involve multiple approval steps.
Opaque fees: Banks don’t disclose exchange markups transparently, increasing costs.
2️⃣ How RBI’s LRS Impacts Outward Remittances
The Liberalized Remittance Scheme (LRS) governs how much money Indian residents can send abroad.
LRS cap: $250,000 per year for education, travel, and investments.
TCS (Tax Collected at Source) rules impact forex remittances.
Banks vs. fintechs: Traditional banks dominate LRS payments, while fintechs are slowly entering.
📌 Key Problem: Even though fintechs like Wise & Nium claim to offer low-cost remittances, they still depend on traditional banking infrastructure, meaning they can’t bypass the inefficiencies of SWIFT.
🚀 The Future of Cross-Border Payments: What’s Changing in 2025?
✅ 1. UPI, Pix & Instant Payment Networks Going Global
Governments are linking domestic real-time payment systems (RTPs) across countries, reducing dependency on SWIFT.
✔ UPI-PayNow (India & Singapore): Near-instant international money transfers.
✔ PIX (Brazil), FedNow (US): New instant settlement systems expanding.
✔ Challenges: Most RTPs are still regional, and adoption takes time.
💡 The Opportunity: If UPI expands to more countries, outward remittances from India could become faster & cheaper than SWIFT.
✅ 2. CBDCs & Blockchain – The Future of Global Money Movement?
With over 130 countries exploring Central Bank Digital Currencies (CBDCs), the big question is:
💡 Will CBDCs replace SWIFT & LRS payments?
Potential Benefits:
✔ Instant global transfers (no intermediary banks).
✔ Lower transaction costs (government-backed stable money).
✔ Better compliance tracking (AML/KYC built-in).
Challenges:
⚠ Not all CBDCs will be interoperable – China’s Digital Yuan and India’s Digital Rupee aren’t integrated with global systems yet.
⚠ Private stablecoins (USDC, USDT) are still leading in cross-border crypto payments.
📌 What This Means for Fintechs: While CBDCs are promising, they won’t disrupt SWIFT & LRS until governments agree on global standards.
🌍 What Needs to Change for Cross-Border Payments to Improve?
For faster, cheaper international payments, these three areas must evolve:
1️⃣ Interoperability Between Payment Systems
Expand UPI-like networks globally (India-Singapore is a great start).
Build fintech solutions that integrate directly with RTPs, bypassing SWIFT.
2️⃣ Regulatory Alignment for Faster Transactions
Governments must streamline AML/KYC compliance, so banks don’t delay transfers.
India’s LRS & tax rules need modernization to reduce payment friction.
3️⃣ More Innovation in Fintech Remittance Models
Fintechs must move beyond FX markups & SWIFT rails to adopt blockchain & smart contracts.
DeFi-based remittance startups could challenge banks if regulations allow.
💡 Final Thoughts: The Next Decade of Cross-Border Payments
We’re at an inflection point where technology is available, but regulation and banking systems are still catching up.
🚀 The real question isn’t whether cross-border payments will improve—it’s who will drive the change.
What’s your take? Drop your thoughts in the comments or reply to this newsletter.
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