Cross-border payments are proving to be an essential element to not just how consumers pay internationally, but how payment service providers can achieve long-term success by accelerating the process across multiple currencies.
Despite the developments of cross-border payments in recent years, there are still liquidity issues that Nkiru Uwaje, Co-Founder & COO of cross-border settlement company MANSA, believes still need to be addressed.
Writing for Payment Expert, Uwaje shared her thoughts on why liquidity solves cross-border sustainability, why real-time settlement represents a ‘paradigm shift’ and notes how new innovations in stablecoins could hold the answer to accelerating cross-border payments to new heights.
The era of costly, slow and cumbersome transactions began to crumble a decade ago, as fintechs leveraged pre-funding solutions to power low-cost and fast global payments.
However, the complete end to slow international transactions powered by intermediary institutions is not over yet, requiring a fundamental shift to reform the payments infrastructure. At the core of this transformation lies a critical challenge: liquidity management. Without robust liquidity solutions, even the most advanced payments will struggle to meet the demands of our fast-paced, interconnected world.
In 2025, the ability to manage liquidity effectively will not merely be a competitive advantage, it will be a prerequisite for the sustainability of cross-border payments providers large and small. As transaction volumes grow and expectations for speed continue to rise, liquidity management will serve as the foundation for building a resilient and scalable global payment ecosystem.
The evolution and limitations of traditional cross-border payments
Historically, cross-border payments have been complex and costly but are vital for global commerce and trade. The traditional model, while functional, has become increasingly misaligned with the fast-paced demands of modern global commerce. The emergence of fintech solutions utilising pre-funded models initially appeared promising but has revealed significant limitations in scalability.
The pre-funded model, while enabling faster payments, creates its own set of challenges as financial institutions must maintain substantial capital reserves across multiple jurisdictions, effectively freezing significant assets that could be deployed more productively elsewhere. This approach becomes increasingly unsustainable as transaction volumes grow, creating a paradox where success leads to greater operational challenges.
The model’s inherent limitations are particularly apparent in emerging markets, where capital requirements raise significant barriers for payment providers seeking to expand their services.
Opportunities & obstacles in real-time settlement
The concept of real-time settlement (RTS) represents a paradigm shift in cross-border payments as true real-time settlement requires immediate access to liquidity across multiple currencies and jurisdictions, enabling instant value transfer without the traditional delays of international banking.
This capability isn’t just about speed, it’s about fundamentally transforming how global commerce operates, enabling businesses to manage cash flow more effectively and make faster strategic decisions. For small and medium-sized enterprises in particular, real-time settlement can mean the difference between growth and stagnation, as it frees up working capital that would otherwise be tied up in transit.
Real-time settlement also has the potential to drive significant cost reductions as traditional cross-border payments often involve multiple intermediaries, each adding fees and delays. By streamlining the process and automating settlement, RTS can eliminate many of these costs, making international transactions more affordable.
This democratisation of payment infrastructure will particularly open doors for businesses in emerging markets, where high fees and slow processing times have historically posed significant barriers.
Risk Management in the Age of Instant Payments
Liquidity will be the cornerstone of sustainable cross-border payments in 2025, as financial institutions grapple with the complexities introduced by RTS. The immediacy of these transactions eliminates traditional processing delays, but it also amplifies risks associated with liquidity gaps, currency fluctuations and market volatility. Without sufficient liquidity, even the quickest payment systems can face bottlenecks, creating systemic vulnerabilities that ripple across the financial ecosystem.
Effective liquidity management requires robust, real-time assessment systems capable of operating across multiple currencies, jurisdictions and time zones. These systems must dynamically assess liquidity needs, predict shortfalls and allocate resources to mitigate risks.
Another critical aspect of managing liquidity risk in real-time payments will be addressing the challenges posed by currency volatility. The speed of transactions leaves little margin for error, meaning institutions need to deploy sophisticated hedging strategies to protect against sudden exchange rate fluctuations.
Building Sustainable Cross-Border Payment Infrastructure
Looking ahead, the success of cross-border payments will depend on creating sustainable liquidity solutions that can scale with growing transaction volumes. This will likely involve a hybrid approach combining traditional banking infrastructure with innovative digital solutions.
We expect to see increased integration of blockchain technology for enhanced transparency, alongside the development of sophisticated liquidity management algorithms. The relationship between traditional banks and fintech companies will continue to evolve, leading to new collaborative models that leverage the strengths of both sectors.
Stablecoins offer a superior alternative to traditional fiat prefunded models for cross-border liquidity management. By providing cryptocurrencies pegged to stable currencies and backed by cash or reserve assets, stablecoins enable near-instantaneous settlement with reduced transaction costs and enhanced transparency.
Unlike prefunded models, which require substantial capital locked in multiple jurisdictional accounts, stablecoins allow for dynamic, real-time liquidity transfer across blockchain networks and currencies. Stablecoins also provide improved regulatory traceability and can be quickly rebalanced, addressing the core liquidity challenges that conventional international payment systems struggle to resolve.
The regulatory landscape will also need to adapt to support RTS, whether powered by stablecoins or new collaborative transaction models, while ensuring financial stability and consumer protection. This will likely lead to the emergence of new financial instruments specifically designed for cross-border liquidity management.
The key to success will be finding the right balance between innovation and stability, ensuring that new payment solutions can scale while maintaining the trust and security that are essential to the global financial system.
The future of cross-border payments lies in creating systems that can provide instant settlement while managing risk and maintaining regulatory compliance. Success will require continued innovation in liquidity management, leveraging both emerging technologies and existing financial infrastructure to create sustainable payment solutions.
As we continue to move through 2025, the ability to manage liquidity effectively will become increasingly central to the competitiveness and sustainability of cross-border payment providers.
