- BRICS Pay is the new cross-border payment network
- HSBC, WeChat, and Alipay are among the first companies to support the BRICS Pay system. This collaboration underscores the interest of global institutions in exploring alternative systems in a multipolar environment.
The BRICS group of countries (Brazil, Russia, India, China, and South Africa) continues to take decisive steps in its strategy aimed at creating a financial system alternative to the traditionally Western-dominated one.
During the recent summit in Beijing, leaders of these countries announced the launch of BRICS Pay, a cross-border payment system designed to reduce dependence on the US dollar and provide a viable alternative to the SWIFT system. This initiative comes in a context where trade tensions, geopolitical conflicts, and sanctions are driving these countries to seek autonomous and resilient financial solutions.
BRICS Pay: involvement of HSBC, WeChat, and Alipay
One of the most notable aspects of BRICS Pay is the involvement of Western and global financial actors who have chosen to support this emerging network. Among the entities involved are HSBC, one of the largest banks with a significant international presence. The super app WeChat and the payment platform Alipay, the two most popular payment apps in China, are also participating, with massive reach in both Asia and worldwide.
This collaboration highlights the interest of global institutions in exploring alternative systems that could allow them to diversify their business strategies and adapt to an increasingly multipolar environment.
In addition, Bank of China, the Bank of India, Punjab National Bank, and Caixa (Brazil) have also expressed their support for BRICS Pay, alongside their participation in SWIFT. The BRICS Pay initiative is designed to interconnect the commercial banks of member countries through their respective central banks, enabling transactions to occur without SWIFT mediation. In this regard, HSBC and the other mentioned actors see this new network as an opportunity to strengthen their presence in developing markets, where trade and transactions in local currencies are on the rise.
A new standard in cross-border payments?
Historically, SWIFT has been the standard interbank messaging system worldwide, facilitating communications between financial institutions to process international payments, although it does not directly transfer funds.
With the growing interest in technologies like blockchain and central bank digital currencies (CBDCs), BRICS Pay aims to integrate these advancements into its system, leveraging blockchain technology for transaction validation and transparency. This would allow BRICS countries to process payments more quickly, cost-effectively, and with less external interference.
Prospects and challenges of BRICS Pay
Currently, the SWIFT system manages around $150 trillion in transactions each year, but the growth of digital payment systems and CBDCs is gaining traction in markets where access to traditional banks is limited.
Additionally, China has advanced in the digitization of its currency with the e-CNY, which, according to the People’s Bank of China, has already registered transactions of up to 7 trillion yuan. This approach could expand the practical applications of BRICS Pay, especially in Asia, where the yuan is increasingly present in regional trade.
The BRICS Pay proposal could redefine the landscape of cross-border payments, particularly in regions seeking to reduce their dependence on the US dollar and explore new avenues for financial collaboration. The involvement of Western entities like HSBC, alongside Asian giants like WeChat and Alipay, demonstrates the potential of this emerging network to bring about change in the global financial system.