No single rail wins: Evaluation of cross-border payment performance in Latin America
Abstract
Latin America has invested heavily in modern domestic payment infrastructure through systems such as PIX, SPEI and Transferencias 3.0, yet cross-border remittance costs remain significantly above the United Nations Sustainable Development Goal (SDG) target of 3 per cent. This paper investigates why technological advancement has not translated into lower cross-border payment costs. Building on the corridor-based ‘rubric versus rails’ framework developed in Part I of this series, the paper evaluates four payment approaches — correspondent banking, faster payment system (FPS) linkages, stablecoins and card push payments — using a five-dimensional assessment rubric covering access and reach, cost, speed, compliance quality, and liquidity and settlement risk. The framework is applied to four representative Latin American corridors, each characterised by a distinct structural constraint: market concentration in Mexico, regulatory complexity in Brazil, currency dysfunction in Argentina, and payment rail fragmentation in Colombia. The analysis demonstrates that payment outcomes are determined primarily by corridor-specific institutional and market conditions rather than by the payment rail itself. Mature domestic payment infrastructure improves local settlement efficiency but does not eliminate structural barriers that continue to shape cross-border costs. The paper concludes that no single payment rail can consistently achieve the SDG cost target across Latin America. Instead, corridor-specific hybrid architectures combining public payment infrastructure, standardised messaging and tokenised liquidity provide a more effective path toward reducing costs and improving cross-border payment performance. Together with Part I, the findings support a broader proposition that successful payment modernisation depends on aligning payment technologies with the structural realities of receiving markets rather than pursuing a universal rail strategy. This paper is Part II of a two-part series. Part I applies the framework to Sub-Saharan Africa. This article is also included in the Business & Management Collection which can be accessed at http://hstalks.com/business.
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Author's Biography
Balakrishnan Mahadevan is a postdoctoral research fellow at the Indian Institute of Management’s Centre for Digital Public Goods. He has played key roles in the digital transformation of payments in India, notably as Chief Operating Officer of the National Payments Corporation of India, where he oversaw the development of innovations such as IMPS (the platform underlying UPI and the Instant Payment System), Aadhaar-enabled payments, the National Automated Clearing House and the RuPay domestic card scheme. Dr Mahadevan has also worked with the World Bank, advising developing countries on strengthening financial infrastructure and digital payment ecosystems. With more than three decades of experience gained at leading banks and major institutions, he brings deep expertise at the nexus of policy, technology and institutional design. Dr Mahadevan holds an MBA in finance, a master’s in political science and public administration, a master’s in bank management and a PhD in finance and payments. He has written numerous articles for national and international journals and serves on the editorial boards of two leading journals focused on payments and banking. His research interests include payments, particularly fast and instant payments, as well as digital public infrastructure.
Divyarani Raghupatruni is Senior Director of Product, Data and Orchestration at Alacriti, where she leads strategy for faster payments, stablecoins and AI-enabled infrastructure for financial institutions. She has over 15 years of experience in FinTech and payments, including prior experience at Block (Square) and Transfast, a cross-border payments platform later acquired by Mastercard. She participates in industry working groups and collaborative initiatives convened by the US Faster Payments Council focused on interoperability and digital assets. Her practitioner-oriented research is regularly published, and she speaks at industry conferences on cross-border payments, digital money, artificial intelligence and financial market infrastructure.
R. Srinivasan is Professor of Strategy and Chairperson of the Centre for Digital Public Goods at the Indian Institute of Management Bangalore. His areas of research and teaching include digital public goods and digital public infrastructure, protocols and open networks, and platform business models. He has written many articles for international journals, in addition to books on strategy and platform businesses, and he engages with both industry and government on consulting and policy assignments.
