BofA plans to launch real-time cross-border payments

• Key insight: Bank of America plans to support real-time cross-border business payments. 
• What's at stake: The bank and its competitors are chasing a multitrillion-dollar market that's growing quickly, with instant processing providing a potential advantage. 
• Forward look: BofA's service should launch in the next quarter. 

With real-time payment networks starting to look beyond their borders, Bank of America is among those trying to get in front of demand for instant settlement.

BofA on Thursday said it would add a real-time option to its cross-border payment product for corporate, commercial and financial clients to send and receive funds through the Swift international payments messaging system or BofA's CashPro digital payment app.

The bank is responding to a shift in instant settlements toward enabling international payments after years of focusing on building usage for domestic transactions. The Federal Reserve, for example, is considering a change that would enable FedNow, the government's instant-settlement option, to support cross-border transactions. The Clearing House's RTP network is also working on enabling cross-border real-time payments. And other major real-time rails such as India's UPI network are also expanding outside of their home markets.

"The change is real-time payment systems are opening up to enable cross-border payments," AJ McCray, head of global payments product at Bank of America, told American Banker, noting the number of real-time payment systems that are working on international payments. "There's enough scale in these systems today that now is really the right time."

What BofA is working on

The bank plans to launch cross-border real-time settlement in the third quarter and is aiming the service at high-volume, low-value international payments.

BofA initially will connect to SPEI in Mexico, the Faster Payments Service in the United Kingdom and Unified Payments Interface in India, among others. Clients will also be able to receive inbound real‑time payments into the United States, where Bank of America says it has about 70 million consumer and small-business clients.

Other services include payment tracking, fee-free transfers, pre‑validation of recipient account information to help minimize failed payments and scheduling for any time, with funds typically delivered within seconds or minutes. BofA is focusing on all businesses, but is particularly approaching smaller businesses that the bank says are increasingly looking to sell internationally.

"There's a set of payments that businesses make that are low value," McCray said, adding these payments range from a few hundred dollars to tens of thousands of dollars.

Legacy methods to transfer funds internationally are better suited to large transfers, according to McCray, who adds the new product is designed for smaller payments for parties such as gig economy workers, content creators, and e-commerce marketplaces. These businesses are using an easy payment experience as a way to compete with their rivals.

"I'm finding that in my conversations with clients, payments are becoming a much larger part of their product set," McCray said. "They see payments to be a way to differentiate their products."

The market

BofA is pursuing a large and growing addressable market for cross-border payments. In 2024, the B2B cross-border payments market had a total global size of $31.6 trillion, and it is set to grow by 58% to $50 trillion in 2032, with a 5.9% CAGR, according to FCX Intelligence.

"If you are the CFO of an American company that already has a treasury relationship with BofA and you need to pay gig workers in Mexico, the U.K., and India, why wouldn't you use BofA's new payment service? There's little risk of ever getting embarrassed by using BofA," said Phillip Philliou, a payments consultant, adding fintechs and blockchain-based payment networks will have to work that much harder to win over and retain BofA customers.

For large businesses, global transaction value in 2024 was $17.8 trillion, and is projected to grow by 62% to $28.8 trillion in 2032, according to FCX. Small to midsize businesses had a 2024 global value of $13.8 trillion and are forecast to rise to $21.2 trillion in 2032. Other large financial institutions are also selling technology to improve cross-border payments. JPMorganChase, for example, is using tokenized deposits to help move corporate funds; while Mastercard Move and Visa Direct are building international rails for real-time payments.

"The rest of the world is increasingly looking at cross-border instant payments, with a range of systems globally already interconnected," Gareth Lodge, principal analyst at Celent, told American Banker. "That puts many U.S. banks at a potential severe disadvantage. BofA is clearly signaling their intent and demand, as are RTP, FedNow, Visa, Mastercard and a whole host of others."

Digital-asset firms such as Ripple have used distributed ledgers, which normally support cryptocurrencies to circumvent correspondent banks, for years as a way to trim cost and time from small-business cross-border payments.

Ripple has sold its model on the argument that the distributed ledger is faster than using correspondent banks, which add steps, time and fees to cross-border transactions. Cross-border payments are often given as a use for stablecoins, which are unlikely to be used for domestic transactions but could be used to reduce time and improve liquidity for international payments.

"The game is on between traditional rails and tokenized money for low value high volume. The more banks with global aspirations can leverage products and connectivity they've already built, why bother with stablecoins?" Alenka Grealish, a research lead at Celent, told American Banker.