Can CBDC Significantly Improve Cross-Border Payments?

Yes, CBDCs have the potential to significantly improve cross-border payments, subject to regulatory approval and network design, by reducing fees, speeding up settlement times, and strengthening compliance with global financial regulations. Until specific CBDC guidance is issued, Order Express will continue to follow its existing KYC (USD 3,000), CTR (USD 10,000), and SAR (USD 2,000) thresholds. Unlike cryptocurrencies, CBDCs are government-backed digital versions of national currencies. For businesses and Money Services Businesses (MSBs), CBDCs offer a faster, more secure, and regulation-friendly alternative to traditional international payment systems. By enabling direct clearing between countries and automating compliance tools like KYC and AML, CBDCs can solve major pain points in today’s global money movement.

CBDCs: The Future of Digital Currency in Cross-Border Payments

What Are CBDCs?

Central Bank Digital Currencies (CBDCs) are digital forms of national currencies issued by central banks. Unlike cryptocurrencies like Bitcoin, CBDCs are government-backed and operate within a regulated financial system. They aim to merge modern technology with stable monetary policies.

CBDCs mark an important shift in how digital money is created and managed. They offer a new way to support secure and transparent financial systems, especially across borders.

There are two main types of CBDCs:

• Retail CBDCs are designed for individuals and businesses. They can be used for everyday purchases or person-to-person payments.
• Wholesale CBDCs are created for use between banks and other financial institutions. They support large-value transactions and settlements.

CBDCs are sometimes confused with fast payment systems like India’s UPI. But CBDCs are not payment platforms. They are digital money that can travel across these systems. Understanding this difference is essential for companies like Order Express that handle regulated cross-border money transfers.

CBDCs can help improve cost, speed, and security when sending money between countries. For MSBs, this could strengthen compliance and boost efficiency. As CBDC development grows, its role in cross-border payments will likely become more significant.

Why Cross-Border Payments Still Face Big Challenges

Global cross-border payments are projected to reach over $250 trillion by 2027, says the World Trade Organization  (source: WTO 2023 Global Payments Report). Yet even in 2025, sending money across borders remains slow, costly, and complicated.

Here are the key challenges:

1. High transaction costs: According to BIS, average global remittance fees are still around 6.3%. These fees reduce the value received by recipients and increase pressure on service providers.
2. Delays in settlement: Payments can take 2 to 5 business days to complete. Delays depend on the number of banks involved and their daily cut-off times.
3. Too many intermediaries: Transactions often pass through several correspondent banks. This increases cost, slows down the process, and introduces more points of failure.
4. Different compliance rules in every country: KYC, AML, the Travel Rule, and currency control laws vary across borders. Following them all can be complex and time-consuming.

For MSBs like Order Express, these challenges are even more demanding. Operating across different legal and banking systems adds risk and reduces efficiency. High costs impact profits. Delays lower customer satisfaction. Disconnected compliance rules raise the chance of errors.

A centrally managed digital currency, like a CBDC, could help solve many of these problems. The need for smarter, unified solutions has never been greater.

How CBDCs Can Reduce Delays and Costs in Cross-Border Payments

CBDCs are being studied as tools to fix the most common issues in cross-border transactions. The World Economic Forum notes several domestic benefits of CBDCs, including broader access to financial services, faster and more efficient payment systems, lower cash dependency, stronger policy enforcement, and better oversight of digital financial activities.

These benefits also extend to international payments, with added advantages:

• Lower costs: CBDCs reduce or remove the need for multiple banks in a transaction. This helps cut down processing fees.
• Faster settlement times: Instead of waiting days, transactions can be settled in seconds. This improves customer satisfaction and boosts liquidity.
• Direct clearing between countries: CBDCs can allow central banks or approved institutions to settle directly, while still requiring screening against OFAC sanctions lists and honoring any correspondent-bank obligations that remain.
• Improved compliance: CBDCs can include digital identity tools that help meet AML and KYC rules. These tools support transparent reporting and reduce manual errors, aligning with BSA/AML compliance.

If cross-border payments were powered by CBDCs, providers like Order Express could operate with greater speed and accuracy. This would lower costs, reduce compliance risk, and help deliver better service to customers.

CBDC Pilot Projects Show What’s Possible for Cross-Border Payments

Several global pilot projects have tested how CBDCs can improve cross-border transactions. These trials show how digital currencies could offer faster and more efficient payment options.

• Project Aber: A joint test by the central banks of Saudi Arabia and the UAE used a shared digital currency for both local and international payments. The result was greater speed and lower processing costs.
• SWIFT’s CBDC Interoperability Tests: SWIFT is exploring how CBDCs can work across different national systems. Early findings show CBDCs can connect with existing networks like SWIFT and domestic platforms.
• Project Inthanon–Lion Rock: The Bank of Thailand and Hong Kong Monetary Authority collaborated to show that CBDC transactions across borders can settle in just seconds.

Although these projects happened in controlled settings, they reveal clear potential. CBDCs could lead to seamless, fast, and regulation-friendly cross-border payments. For payment providers like Order Express, these breakthroughs may help reshape future operations.

How CBDC Models Could Work for Cross-Border Payment Providers

Countries are testing different ways to roll out CBDCs based on their financial systems and policy goals. Each model has different effects on how MSBs like Order Express could operate.

1. Direct Model: In this setup, the central bank distributes CBDC directly to the public. While it removes intermediaries, it also increases the bank’s workload.
2. Indirect (Two-Tier) Model: Here, the central bank issues CBDC to intermediaries like banks or MSBs. These intermediaries handle customer access and support. This works well for companies like Order Express that operate agent-based check cashing networks or similar financial services.
3. Hybrid Model: This blends features of both systems. Central banks and intermediaries share responsibility. It allows flexibility while maintaining strong oversight.

The two-tier model is especially useful for MSBs. It enables broader access, supports compliance, and integrates easily with current infrastructure. For a company like Order Express, this structure makes it possible to offer CBDC-based services while maintaining efficiency and regulatory compliance.

Why Security, Compatibility, and Privacy Matter for CBDCs

For CBDCs to succeed in cross-border payments, they must meet key standards. Security, interoperability, and privacy are essential, especially for regulated providers like Order Express.

Strong Security Is a Must

CBDC systems must protect against fraud, hacking, and system failures. This includes secure digital wallets, strong encryption, and backup systems. Fraud prevention aligns with identity theft resources already in use today.

Interoperability Ensures Global Reach

CBDCs need to work across countries and platforms. Without that, payments remain limited. Global standards like ISO 20022 help enable secure, consistent protocols and messaging formats.

Privacy Must Be Protected

CBDC networks must respect data privacy while supporting regulations like GDPR and OFAC screening. For MSBs like Order Express, it’s a balance, ensuring customer data is safe while staying fully compliant.

Regulation-friendly CBDCs can also support requirements like the Travel Rule, Suspicious Activity Reports (SARs), and Currency Transaction Reports (CTRs). When built into transactions, these tools support lawful, transparent payments across borders.

Conclusion

According to the CBDC Tracker, over 130 countries representing 98% of global GDP are exploring CBDCs. These pilots show how cross-border payments can become faster, cheaper, and more transparent. Success will depend on strong regulation, smooth system integration, advanced security, and broad financial access. Interoperability and public–private collaboration are also key for adoption.

At Order Express, we are closely watching these developments. With our commitment to AML/BSA compliance, global agent network, and secure infrastructure, we’re well positioned to adapt to a CBDC-driven landscape. As central banks push innovation forward, we aim to offer compliant, customer-friendly services powered by next-generation digital money. We stand ready to support compliant cross-border payment solutions for everyday needs, including purchases such as plane tickets, courier services. For further information about our CBDC-readiness initiatives, please contact us.

Disclaimer: All CBDC features described here are subject to future central-bank regulations and may change before commercial launch.

Frequently Asked Questions

What is a CBDC and how does it work?

A CBDC is a digital version of a national currency issued and backed by a central bank. It is used electronically for payments. It works like traditional money but exists in digital form. CBDCs enable secure storage, transfer, and receipt of value through regulated platforms.

How can CBDCs improve cross-border payments?

CBDCs reduce fees by removing unnecessary intermediaries in the payment chain. They allow near-instant settlement of international transactions. Transactions become more transparent and easier to track. Built-in identity features also support stronger compliance with global financial regulations.

Will CBDCs replace banks or payment providers?

No, CBDCs are designed to work with existing financial institutions, not replace them. Banks and MSBs remain central to service delivery. These institutions distribute CBDCs and provide customer support. CBDCs aim to enhance financial systems, not eliminate private-sector roles.

Are CBDC transactions secure and private?

Yes, CBDCs use encryption and advanced digital security protocols. Data is protected through secure wallets and verified transaction systems. Personal information stays private but accessible for regulatory reporting. This ensures privacy while meeting compliance requirements.

Can companies like Order Express use CBDCs?

Yes, especially under the two-tier model supported by many central banks. This model allows MSBs to distribute CBDCs to customers. It also enables secure and compliant cross-border payment services. Order Express can integrate CBDCs without major operational changes.