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- Friendship of transfers: BRICS Pay transactions without intermediary banks will begin in 2027.
Friendship of transfers: BRICS Pay transactions without intermediary banks will begin in 2027.
BRICS Pay will test a new cross-border payment mechanism next year, Izvestia found out. The system should facilitate business transfers in national currencies between the BRICS countries and reduce dependence on long chains of intermediary banks. The project is based on a decentralized financial messaging network and a closed blockchain platform. Exporters of raw materials, metals and fertilizers, importers of equipment and logistics companies with regular payments within the association may be the first to feel the effect. BRICS Pay also provides for the possibility of working with digital currencies of central banks, but their connection will depend on the decisions of regulators. How much the new system will simplify cross—border payments and whether it will allow you to save money is in the Izvestia article.
What BRICS Pay is launching
BRICS Pay will begin testing corporate settlements without a long chain of intermediary banks in the second half of 2027, Andrey Mikhailishin, CEO of BRICS Pay JSC, told Izvestia.
Nowadays, cross-border payments often go through several credit institutions. Each participant in the chain carries out checks, can charge a commission and extend the processing time. BRICS Pay should provide companies with an additional route for transfers directly between national payment infrastructures, the expert explained. This will reduce dependence on individual intermediaries, but it does not mean a complete abandonment of banks: they will still be responsible for the final payment, currency transactions and control.
The new mechanism will be based on DCMS, a decentralized system for transmitting interbank financial messages. Simply put, it will allow banks to exchange payment data through a common network without a single control center, Kirill Komalenkov, Director of strategic communications at Bitbanker, explained. At the same time, the system itself does not transfer money: after confirming the transaction, credit institutions still need to complete the payment in the national currency.
However, another element will help here — a closed blockchain network. It is a secure data storage system in which information about transactions is simultaneously recorded by several participants and confirmed using cryptographic mechanisms. It is planned to record the mutual obligations of the participants and synchronize information about the calculations. This can reduce the number of individual transactions between banks and simplify mutual settlements. Nevertheless, customer checks and currency controls will remain at the same level.
The simplest way to think of the BRICS Pay mechanism is as a netting. If a Russian company has to pay to a Chinese company and a Chinese company has to pay to a Russian company, the system does not have to make two separate payments. She will settle the counterclaims, and the banks will transfer only the difference. Such a multilateral settlement will reduce the number of transactions and the amount of money that has to be spent through correspondent accounts, explained Oleg Abelev, head of the analytical department at Rikom-Trust. At the same time, financial information will be transferred via BRICS Pay instead of the traditional SWIFT until 2022.
If the money really needs to be transferred, BRICS Pay should also shorten the payment path. Currently, there may be several intermediary banks between the sender's bank and the recipient's bank. The new system will allow transferring payment information directly between connected banks via DCMS, so there will be fewer unnecessary links in the chain, said Ruslan Yavon, Chairman of the Supervisory Board of Gbig Holdings.
Settlements with digital currencies of central banks may be connected with the same infrastructure in the future. However, this does not mean that the digital ruble, digital yuan or other such currencies will automatically be used in cross-border payments as early as 2027.
To do this, central banks will need to independently create technical gateways between their digital currencies and define rules for accessing them. BRICS Pay provides for the possibility of such integration, but the timing and format of its practical application will depend on the decisions of regulators and the readiness of the infrastructure, said Andrey Mikhailishin.
Izvestia sent inquiries to the Ministry of Finance and the Central Bank about the possible timing of the introduction of the digital ruble into the BRICS Pay infrastructure.
What does this mean for business?
The benefits will depend not so much on the technology itself, but on the number of links that can be removed from a particular payment route. With large volumes of foreign trade, even a reduction in processing time and several commissions can have a noticeable effect, said Konstantin Savinovsky, CEO of Inter.
The most noticeable result may be for companies that regularly make payments within BRICS. First of all, these are exporters of raw materials, metals, fertilizers and food, importers of equipment, as well as transport and logistics companies, the expert believes.
For them, the predictability of operations is more important than the technology itself. If the payment can take a shorter route, the business will receive fewer delays and additional costs. However, passing the message quickly does not mean instant funds transfer: banks will still need to perform the conversion, have the necessary funds for settlement and comply with financial control requirements.
Whether BRICS Pay will become widespread also depends on the number of banks connected. At the first stages, the system is likely to cover only a limited number of destinations — with certain financial institutions, currencies, limits and types of transfers, says Tatiana Tirskikh, Managing Director for Sovereign and Regional Ratings at Expert RA. The main indicator of success will be the ability to go all the way — from the order to the final transfer of funds — without manual intervention and contacting a third-country bank.
Another effect of BRICS Pay is the ability to make payments directly in national currencies, without using the dollar as an intermediate currency. This reduces the dependence of businesses on dollar infrastructure and related conversions, experts explained.
What can prevent scaling
The main difficulty is not related to the technology itself, but to the coordination of the rules of its operation. The BRICS countries have different requirements for currency control, customer verification and anti-money laundering, data protection and cross-border transactions. This may make it difficult to develop common rules, said Evgeny Masharov, a member of the Civic Chamber of the Russian Federation.
In addition, banks will have to integrate a new channel into existing systems. Here we are talking not only about software integration, but also about cybersecurity, access control, allocation of responsibility in case of failures and the procedure for confirming the finality of calculations. The largest banks can join the limited pilot, but it is premature to talk about the full readiness of the entire system, said Ruslan Yavon, Chairman of the Supervisory Board of Gbig Holdings.
Another factor will be the differences in the launch rates of the system in different countries. According to Natalia Milchakova, a leading analyst at Freedom Global, even when calculations are launched on time, the system may remain niche in the early years: scaling will require checking its performance under high load and resolving compatibility issues between national platforms and accounting systems.
However, the very fact of the announcement of the start date shows that the need for such a mechanism has already been formed among the members of the association, says the executive director of the Institute of Growth Economics named after P.A. Stolypin Anton Sviridenko.
Experts consider the launch and expansion of individual corporate routes to be the most realistic scenario for 2027, rather than the simultaneous transition of all BRICS countries to the new system.
If this stage is successful, the project will be able to gradually expand the number of participants and payment routes, turning from a separate mechanism for foreign trade into one of the elements of a broader system of international settlements.
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