BRICS Aims to Accelerate Cross-Border Payments Using Digital Infrastructure
BRICS nations are exploring the use of Digital Public Infrastructure (DPI) for payment systems, aiming to establish a financial system less reliant on U.S. intermediaries.
The BRICS summit in September 2024 is set to focus on leveraging Digital Public Infrastructure (DPI) for cross-border payments. The objective is to develop a financial system that reduces dependency on U.S. intermediaries and promotes faster, cheaper, and more secure transactions among member states.
Spearheaded by India, the initiative aims to operationalize BRICS Pay, a scheme designed to link existing national DPI payment systems, such as India's UPI and Brazil's Pix. The system would utilize local currency settlement and explore the integration of central bank digital currencies (CBDCs).
The strategy intends to foster digital sovereignty through open and interoperable digital rails. This would enable banks and fintech companies to compete and reduce fees currently collected by U.S. financial intermediaries and credit card providers.
However, research highlights that successful cross-border DPI systems require robust governance. Key challenges include reconciling diverse regulatory frameworks, data protection rules, and supervisory expectations. Beyond technical solutions, building trust and establishing common dispute resolution mechanisms are crucial for effective scaling.