Moneff CEO sets out constraints on cross-border payment links

Cross-border payment providers linking emerging markets with the UK and EU face higher cost, slower processing and settlement risk when local banking systems depend on different rails and regulatory processes, according to Sanjar Mavlyanov, chief executive and founder of Moneff. In an external opinion published by Finextra, Mavlyanov said the operational task is to connect established systems such as SEPA and the UK Faster Payments Service with banks that often use SWIFT as their main international channel.

Mavlyanov framed the problem as an infrastructure challenge for businesses trading between major financial centres and faster-growing emerging markets. The objective, he said, is to allow companies to hold, receive and send several currencies without needing separate bank accounts in each jurisdiction.

Payment rails need translation

Multi-currency IBANs are central to that model, according to Mavlyanov. A single account identifier can support euro, sterling and emerging-market currency activity for users, while the provider behind it must connect multiple systems that process messages and settlements in different ways.

In his account, an emerging-market core banking platform must pass instructions to an application programming interface engine, which then directs the payment to the appropriate network. Euro payments may use the Single Euro Payments Area, while sterling payments may move through the UK Faster Payments System. International transfers from emerging-market banks may arrive through SWIFT.

Mavlyanov said SEPA and Faster Payments can offer faster, lower-cost domestic or regional processing than a traditional correspondent-banking chain. SWIFT remains widely used and recognised globally, he said, but payments can be delayed and made more expensive when they pass through several correspondent banks, each adding fees and time.

The infrastructure provider’s role, as described by Mavlyanov, is to convert the financial message and data from one format into the format required by another payment rail. That process also requires real-time reconciliation and checks on whether the relevant currency liquidity is available when the payment is executed.

Compliance gaps add friction

Mavlyanov said technical connectivity is only part of the problem. Cross-border corridors must also satisfy rules in jurisdictions that may assess documentation and risk in different ways.

He cited the European Union’s anti-money laundering directives and know-your-customer requirements as examples of structured compliance regimes in established markets. Emerging markets are also committed to tackling financial crime, he said, but may use different documentation standards or have regulatory systems that develop at a different pace.

One operational example raised by Mavlyanov is the verification of ultimate beneficial ownership for a company in a market without a central digital corporate registry. In such cases, he said, checks can become manual and time-consuming.

For payment providers, the compliance requirement is to meet standards on both sides of a corridor. Mavlyanov argued that transaction monitoring should use contextual data rather than reject transactions solely because they appear unusual by the standards of another market.

Liquidity remains a settlement risk

Currency timing creates a further constraint. Mavlyanov said exchange rates can move quickly while banking days and market hours differ across regions. If one local banking day closes before another market opens, capital can be caught between settlement cycles.

He said providers can reduce that risk by keeping liquidity pools in financial hubs, with balances in euros, pounds and major emerging-market currencies. Pre-funded balances allow the customer-facing transfer to appear immediate, while the institutional settlement is completed later.

Mavlyanov said this model requires forecasting so that providers keep enough capital available without leaving excessive funds idle. He described the broader task as building links between existing payment systems rather than replacing them.

This story draws on original reporting from Finextra Research.