Payments Report 2021

International harmonisation affects Sweden

Download PDF

Need for faster and cheaper cross-border payments

Published: 3 November 2021

By cross-border payments, we mean payments made between Sweden and other countries. This could be card payments when we are abroad, bank transfers to other countries when we make larger purchases or send gifts, and so-called remittances, when people in Sweden send money to relatives in other countries.

Sending money abroad is more complicated than making domestic payments. This is because it requires exchanging currency and involving banks and payment systems in more than one country. If payments are to be made quickly, the participants in the payment process need to be able to communicate with one another in an agreed format that is some form of common language, which is not always the case today (see FACT BOX – ISO20022 – New standard for payment orders). As a result of these complications, cross-border payments are often expensive, slow and intransparent (see Are payments efficient?). For instance, an account transfer between a bank account in Sweden and an account in a bank outside the European Economic Area (EEA) often costs between five and 50 per cent of the sum transferred and often takes several days.

The problems with cross-border payments being slow and expensive has been pointed out by international organisations, the Riksbank and other central banks. There are several international initiatives under way (see The Riksbank is actively participating in the international cooperation).

FACT BOX – ISO20022 – New standard for payment orders

Digital payments are based on communication between the parties involved in the payment – the systems must therefore communicate using the same ‘language’. All around the world, central banks, banks and financial infrastructures use the SWIFT network and its format and standard to make payments. SWIFT's earlier standard has limitations, for instance with regard to the volume of information that can be sent with a payment. In autumn 2020, SWIFT therefore presented a strategy and timetable for migrating to the format ISO20022.

The transition will begin in November 2022, when the Eurosystem and the ECB migrate to ISO20022. Worldwide, the transition is expected to proceed until 2025, which is SWIFT’s final date for the old format and the old standard for international payments. The Riksbank’s new settlement service for instant payments, RIX-INST, which comes into operation in May 2022, will be based on ISO20022 (see RIX being further developed to meet future needs).

As ISO20022 is used internationally, it will open up for faster and more efficient processing of payments between countries and currencies. The new format, which includes more information, can moreover contribute to increased transparency and traceability for international payments.