Executive summary
Five years ago, the G20 issued its Roadmap for Crossborder Payments, calling for faster and cheaper payments by the end of 2027. An October 2025 assessment by the Financial Stability Board (FSB) found that most world regions are not progressing rapidly enough to reach the G20’s goals.
The purpose of this study is to help further the attainment of the G20’s crossborder payments goals. In particular, this study analyzes how the persistent payment frictions and complex financial regulations that contribute to them impact international trade and small and medium enterprises (SMEs) engaged in crossborder ecommerce. The study also offers policy proposals for simpler, digitized, and interoperable financial regulations for unlocking crossborder ecommerce.
This study is based on survey data on 2,100 small importers in seven markets (Brazil, Germany, Indonesia, Malaysia, the Philippines, South Africa, and Thailand); 1,000 small multimarket exporters in the UK and the United States, as well as econometric work, including a gravity model of international trade.
The main findings on the challenges are as follows:
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SME importers face significant costs, documentation requirements, and foreign exchange regulations to pay for imports. As many as 72 percent of importers report high payment-related fees in at least a third of import transactions, 65 percent experience long processing times, and 62 percent face foreign exchange controls. The workloads translate into “hidden” monetary costs – $100 or more – for as many as 61 percent of importers.
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In response to crossborder payments frictions, 96 percent of SME importers resort to workarounds such as e-wallets and cards, paying through friends and family abroad, and using cryptocurrencies – which undermines transparency and traceability in payment flows.
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Payment frictions also undermine SME importers’ access to inputs that would enhance their profitability: more than one-half of multimarket exporters have withdrawn from export markets with outbound payments frictions.
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Payment frictions faced by each SME scale up to systemic drag, captured in this study through a Crossborder Payments Enablement Index. The United States, UK, and Singapore outperform on the index, while African and South and Southeast Asian economies score lowest.
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Putting in place simpler, digitized, and interoperable financial regulations promotes trade and per capita incomes. A 10 percent improvement on the Crossborder Payments Enablement Index promotes trade by 3 percent, equivalent to the effect of a 0.5-1.3 percent tariff cut. This improvement can in turn translate into a per capita income gain of 0.6-1 percent.
As policy recommendations, this study calls for the G20 and other economies to pursue four measures, without sacrificing traceability of payments or enforcement of financial regulations:
1. Simplify the enforcement of financial regulations and monitor overenforcement. Excessive and duplicative document requirements are a top pain point for importers, raising both costs and processing times. To enhance SMEs’ payments, all countries should pursue enforcement that is commensurate with the size, risk exposure, and transaction volumes. Simplification should not be seen as deregulation, but as calibration of due diligence and processes to risk.
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2. Digitize compliance and reporting and leverage AI to identify risk. Digital tools cut false positives, strengthen AML outcomes, and free compliance capacity. Digitization of the payment value chain, such as customer due diligence, beneficial ownership registries, and the submission of suspicious transactions reports can reduce burdens facing SMEs in payments. AI opens new opportunities for promoting automated decision-making and the accuracy of risk assessments. The next wave of financial integrity will come from intelligent automation, not more paperwork.
3. Interoperate domestically and crossborder through the adoption of ISO 20022 and APIs as well as corporate digital IDs. Simpler, interoperable rules open payment corridors for SMEs. ISO 20022, a standard for exchanging electronic messages among banks, supports straight-through processing (STP), automated reconciliation, and efficient implementation of AML/CFT and sanctions controls. APIs promote access to data for automated due diligence and decision-making. In addition, governments should put in place corporate digital IDs and promote the adoption of Legal Entity Identifier (LEI) launched by the G20 and already used by two million firms.
4. Empower SMEs through including SME-related KPIs in the G20 Roadmap and Financial Action Task Force (FATF) Mutual Assessments, and promote technical assistance to ease the payments burdens on small importers. The G20 and FATF assessments should regularly track how payments frictions impact SMEs in crossborder business. Meanwhile, IMF and World Bank’s technical assistance work could better bring together efforts to improve financial regulations, digitize economies, and promote SME ecommerce. In addition, governments could form next generation digital economy agreements (DEAs) with binding rules aimed at the simplification, digitization, and interoperability of payments-related policies that impact SMEs.
Financial regulations are in place for a reason: to uphold the integrity of the financial system and sustain trust. Yet evidence shows that rigid rules and their over-enforcement and manual, duplicate processes can inadvertently create friction in trade without reducing risk. What is needed is not deregulation, but enforcement of lower burden that reduces payments costs and promotes SME trade.
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