The post, authored by Rodrigo Mejia-Ricart, research and public policy analyst at the United Nations, Camilo Tellez, head of research and innovation at the Better than Cash Alliance, and Marco Nicoli, senior financial sector specialist at the World Bank, notes that traditional B2B cross-border payments tend to be slow and opaque, which affects the business and cost structure of remittance service providers.

"Moving funds through the current corridors requires transferal through the relevant domestic payment systems, which often have different operating hours and are located in different time zones," the authors state. "For certain corridors, the funds must be routed through several banks and intermediaries before they reach their destination, leading to higher fees and slower payment settlement."

The paper suggests that the use of distributed ledger technology could help bring down remittance costs and improve compliance, citing innovations from the likes of Ripple, Circle, Swift, Visa, and JPMorgan as prime examples of the push for innovation within this space.

Nonetheless, two potential stumbling blocks to wider uptake are identified:

• A framework is needed for DLT solutions to be adopted across multiple jurisdictions. Today, regulatory uncertainty and mistrust in DLT-based solutions, in part due to confusion between crypto-assets and their underlying DLT technology, are impeding the development of such a framework.
• It remains unclear if DLT-based solutions will be able to outperform other technologies available in the payments space, with questions and concerns remaining unresolved on key issues such as security, governance rules for protocols, recourse mechanisms for users, privacy, and scalability, among others. For example, as fast payments are increasingly adopted to facilitate real-time domestic payments, solutions like SWIFT GPI could allow links between domestic fast payments systems, achieving real time and low cost transfers across borders.