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Smart Contracts, Smarter Payments: Innovating Cross Border Payments and Reporting Transactions

Maruf Ahmed Mridul, Kaiyang Chang, Aparna Gupta, Oshani Seneviratne

TL;DR

This paper tackles the inefficiencies of traditional cross-border payments by proposing a blockchain-based framework that emulates the CBPR+ process and translates ISO20022 messages using smart contracts on EVM-compatible networks. The core approach combines autonomous smart contracts with a web client to manage interbank transactions and ensure interoperability, transparency, and regulatory compliance. The key contributions include a novel architecture for cross-border payments, a prototype integrating smart contracts and web clients, and ISO20022 translation mechanisms that align with CBPR+ standards. The framework aims to reduce costs and settlement times while enabling secure, auditable, and compliant cross-border transactions, effectively bridging TradFi and DeFi ecosystems.

Abstract

The global financial landscape is experiencing significant transformation driven by technological advancements and evolving market dynamics. Moreover, blockchain technology has become a pivotal platform with widespread applications, especially in finance. Cross-border payments have emerged as a key area of interest, with blockchain offering inherent benefits such as enhanced security, transparency, and efficiency compared to traditional banking systems. This paper presents a novel framework leveraging blockchain technology and smart contracts to emulate cross-border payments, ensuring interoperability and compliance with international standards such as ISO20022. Key contributions of this paper include a novel prototype framework for implementing smart contracts and web clients for streamlined transactions and a mechanism to translate ISO20022 standard messages. Our framework can provide a practical solution for secure, efficient, and transparent cross-border transactions, contributing to the ongoing evolution of global finance and the emerging landscape of decentralized finance.

Smart Contracts, Smarter Payments: Innovating Cross Border Payments and Reporting Transactions

TL;DR

This paper tackles the inefficiencies of traditional cross-border payments by proposing a blockchain-based framework that emulates the CBPR+ process and translates ISO20022 messages using smart contracts on EVM-compatible networks. The core approach combines autonomous smart contracts with a web client to manage interbank transactions and ensure interoperability, transparency, and regulatory compliance. The key contributions include a novel architecture for cross-border payments, a prototype integrating smart contracts and web clients, and ISO20022 translation mechanisms that align with CBPR+ standards. The framework aims to reduce costs and settlement times while enabling secure, auditable, and compliant cross-border transactions, effectively bridging TradFi and DeFi ecosystems.

Abstract

The global financial landscape is experiencing significant transformation driven by technological advancements and evolving market dynamics. Moreover, blockchain technology has become a pivotal platform with widespread applications, especially in finance. Cross-border payments have emerged as a key area of interest, with blockchain offering inherent benefits such as enhanced security, transparency, and efficiency compared to traditional banking systems. This paper presents a novel framework leveraging blockchain technology and smart contracts to emulate cross-border payments, ensuring interoperability and compliance with international standards such as ISO20022. Key contributions of this paper include a novel prototype framework for implementing smart contracts and web clients for streamlined transactions and a mechanism to translate ISO20022 standard messages. Our framework can provide a practical solution for secure, efficient, and transparent cross-border transactions, contributing to the ongoing evolution of global finance and the emerging landscape of decentralized finance.
Paper Structure (19 sections, 1 figure, 1 table)

This paper contains 19 sections, 1 figure, 1 table.

Table of Contents

  1. Introduction
  2. Background
  3. Blockchain Technologies
  4. Cross-Border Payments and Reporting Plus (CBPR+)
  5. Blockchain for Cross Border Payments
  6. Methodology
  7. Detailed System Architecture
  8. Smart Contracts
  9. Web Client
  10. Security Protocols
  11. Evaluation
  12. Gas Consumption Metrics
  13. Transaction Fees and Contract Deployment Costs
  14. Discussion
  15. Flexibility and Customizability
  16. ...and 4 more sections

Figures (1)

  • Figure 1: Workflow of the Framework for an Example Transaction involving a Debtor and Creditor for a Cross Border Payment.