1. Introduction

The SWIFT (Society for Worldwide Interbank Financial Telecommunication) system is the main tool for executing international bank transfers and exchanging financial messages between its members and their clients. The SWIFT community unites over 11,000 financial institutions in 200 countries, processing around 50 million messages daily. Amid economic and geopolitical transformations of the global financial market, SWIFT remains a key tool for cross-border payments but faces several challenges, including sanctions and the development of alternative payment systems. One important aspect of international payments is the regional division of financial flows. Economies in different parts of the world form so-called payment regions, within which cross-border settlements are carried out more easily than between countries from different areas. In this article, we explore the use of SWIFT for international payments and examine the major payment regions currently in place, including their composition and characteristics.

2. SWIFT and Its Role in International Payments

SWIFT is not a payment system, as many believe, but a network for transmitting financial messages. Transfers via SWIFT are made through banks’ correspondent accounts, allowing banks and their clients to conduct international settlements. SWIFT’s main advantages:

• Wide geography – SWIFT covers more than 200 countries, including most of the world’s major financial centers.
• High level of security – strict data protection standards ensure the reliability of transactions.
• Efficiency and standardization – unified financial messages enable banks to process payments quickly and accurately.
• Support for various currencies – SWIFT works with the major reserve currencies, including USD, EUR, GBP, JPY, and CHF. However, SWIFT also has drawbacks:
• High transfer costs.
• Long processing times due to AML & Compliance checks (1–5 business days).
• Dependence on the sanctions policies of individual countries. In recent years, SWIFT has faced competition from regional payment systems (e.g., China’s CIPS) and central bank digital currencies (CBDCs), which are influencing the structure of international financial flows.

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3. Global Payment Regions

International financial flows are structured regionally due to trade ties, currency zones, and political factors. Let’s explore the main payment regions and the countries included in them.

3.1. USA and Canada

This region is the world’s largest financial hub, dominated by USD payments. New York and Toronto are key SWIFT transaction hubs.
Main countries: USA, Canada.

3.2. European Economic Area (EEA)

This zone includes EU countries and EFTA members. The euro (EUR) dominates, and payments are made via SEPA and TARGET2 systems.
Main countries: Germany, France, Italy, Spain, Netherlands, Belgium, Austria, Finland, Sweden, Denmark, Ireland, Portugal, Greece, Luxembourg, Norway, Switzerland, Iceland, Liechtenstein.

3.3. Middle East and North Africa (MENA)

This region plays a key role in oil and gas trade, with financial transactions conducted in USD, EUR, AED, and SAR.
Main countries: Saudi Arabia, UAE, Egypt, Qatar, Bahrain, Kuwait, Morocco, Lebanon, Jordan, Algeria, Tunisia, Oman.

3.4. CIS (Commonwealth of Independent States)

This region’s economy is tied to trade in energy, metals, and agriculture. Main currencies: RUB, KZT, BYN.
Main countries: Russia, Kazakhstan, Belarus, Uzbekistan, Armenia, Azerbaijan, Kyrgyzstan, Tajikistan, Turkmenistan.

3.5. Southeast Asia

This region actively uses SWIFT for international settlements but also develops alternatives like China’s CIPS.
Main countries: China, Japan, South Korea, Singapore, Malaysia, Thailand, Indonesia, Philippines, Vietnam.

3.6. India, Pakistan, Bangladesh, Sri Lanka

Financial flows here are related to labor exports and domestic capital markets. India promotes UPI for cross-border payments.
Main countries: India, Pakistan, Bangladesh, Sri Lanka.

3.7. Central and South America

This region’s financial system is based on USD, though local currencies are gaining popularity.
Main countries: Brazil, Argentina, Mexico, Chile, Colombia, Peru, Venezuela.

3.8. Central and Southern Africa

The region faces high SWIFT payment costs and uses alternatives like PAPSS.
Main countries: Nigeria, South Africa, Kenya, Egypt, Ethiopia, Ghana, Tanzania, Algeria, Sudan.

3.9. Australia and Oceania

Australia actively uses SWIFT but is also developing the NPP system for domestic payments.
Main countries: Australia, New Zealand, Fiji, Papua New Guinea.

3.10. “Dark Side”

This term refers to countries under heavy sanctions, where SWIFT transfers are restricted or banned.
Main countries: Iran, Syria, Afghanistan, North Korea.

4. SWIFT Alternatives

In recent years, countries and financial institutions have developed alternative cross-border payment systems:

• CIPS (China’s Cross-Border Interbank Payment System) – supports yuan in international settlements.
• SPFS (Russia’s Financial Message Transfer System) – an alternative to SWIFT for Russian banks.
• PAPSS (Pan-African Payment and Settlement System) – accelerates settlements between African countries.
• CBDCs (Central Bank Digital Currencies) – digital versions of national currencies that may become alternatives to SWIFT.

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5. SWIFT

SWIFT remains the main channel for international payments, but the world is changing rapidly. The rise of regional payment systems and digital assets is transforming financial flows. The global financial system is becoming more multipolar, and future payment solutions will incorporate both traditional banking channels and innovative technologies.

Regional Differences

A country’s classification into a payment region depends on many factors that determine its financial and trade ties. The main parameters include:

1. Currency zone and dominant settlement currency

• Which currencies dominate domestic and international payments?
• Does the country use reserve currencies (USD, EUR, GBP, JPY, CHF) or its own for cross-border operations?
• Is the country part of currency agreements (e.g., euro in EEA, yuan in China)? Example:
• EU countries are part of EEA, using the euro (EUR) and operating under SEPA.
• CIS countries rely on the Russian ruble (RUB) and SPFS (SWIFT alternative).

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2. Trade and economic ties

• Where is the country's main export/import directed?
• Who are the key trade partners?
• Is the country part of major trade blocs (EU, NAFTA, ASEAN)? Example:
• MENA forms a unified payment region due to oil/gas trade, dominance of USD and local currencies (AED, SAR).
• China promotes CIPS and yuan payments across Southeast Asia.

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3. Financial infrastructure and payment systems

• Is the country part of international systems (SWIFT, SEPA, CIPS, SPFS, PAPSS)?
• Are there national/regional alternatives?
• How advanced are digital payments and digital assets? Example:
• Russia uses SPFS for CIS settlements after SWIFT disconnection.
• China develops CIPS to reduce reliance on SWIFT.
• Africa implements PAPSS to reduce USD dependence.

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4. Political and sanctions-related factors

• Is the country under sanctions that limit SWIFT access?
• Are there geopolitical factors affecting payment flows?
• Do banks use alternative systems due to sanctions? Example:
• Iran, North Korea, Syria, Afghanistan – “dark side,” cut off from SWIFT.
• CIS countries partially use SPFS after sanctions against Russia.

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5. Financial centers and banks

• Does the country host global or regional financial hubs?
• What’s the market liquidity level?
• Where are key correspondent banks located? Example:
• USA and Canada form a separate region with NYC and Toronto as major hubs.
• UK remains a SWIFT node via London, despite Brexit.

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6. Level of digitalization and innovation

• Are CBDCs in use?
• Are fintech and e-payments developed?
• Is there a move toward decentralized mechanisms? Example:
• China pushes digital yuan and alternative systems.
• SEA countries (Singapore, Indonesia, Thailand) adopt fintech, reducing SWIFT usage.

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A country’s payment region affiliation is shaped by geography, economy, politics, and technology. Key criteria include dominant currency, trade ties, participation in payment systems, and sanctions. These factors form the global payment architecture, which continues to evolve in response to economic and technological shifts.

Difficulties in Cross-Border Payments Between Different Payment Regions

Transfers between payment regions involve technical, economic, regulatory, and political barriers. These difficulties stem from differences in currency zones, regulations, banking infrastructures, and system integration levels.

1. Currency Barriers and Conversion

Issue: Different regions use different currencies, requiring conversion and adding costs.

• Unstable exchange rates introduce currency risks.
• Intermediary currencies (e.g., USD for Asia-Europe) lengthen processing and increase fees.
• Currency restrictions: some countries prohibit foreign currencies (e.g., China limits yuan conversion).

📌 Example:
If a Russian company wants to pay a supplier in Brazil, RUB must be converted to USD and then to BRL, causing added fees and delays.

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2. Payment Systems and Infrastructure Differences

Issue: Each country/region has its own infrastructure, often not integrated with others.

• SWIFT is the global standard, but many (China, Russia, EU) are building alternatives.
• Not all countries support instant payments – processing can take hours to days.
• Developing countries may have outdated, less reliable systems. 📌 Example:
  SEPA transfers in Europe are instant, but payments from the EU to Latin America may take days due to lack of integration.

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3. Regulatory Barriers and AML/Compliance

Issue: Different AML/Compliance standards slow down fund transfers.

• Banks must review transaction details, leading to delays or denials.
• Some countries enforce strict currency control (e.g., China, India, Argentina).
• Some payments require regulatory approval, especially for large sums. 📌 Example:
  A transfer from Europe to Russia may be blocked due to sanctions or AML concerns.

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4. High Fees for Cross-Border Transfers

Issue: International bank transfers are expensive, especially with multiple intermediaries.

• Correspondent banks charge 0.1%–3% for processing.
• Added conversion costs.
• In less integrated markets, fees are even higher. 📌 Example:
  A $10,000 transfer from the USA to South Africa may incur $50–$100 in banking fees.

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5. Sanctions and Geopolitical Restrictions

Issue: Sanctions block payments and create uncertainty.

• SWIFT bans (Russia, Iran) prevent standard transfers.
• Bans on working with certain banks or countries.
• “Grey lists” require enhanced due diligence. 📌 Example:
  A European company can’t send funds to Iran due to EU and US sanctions.

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6. Limited Access to Alternative Payment Systems

Issue: New solutions (Ripple, PayPal, crypto) are often restricted by law or custom.

• Cryptos bypass banks but face varied legal treatment.
• CBDCs are still in development and not global yet.
• Regional systems (CIPS, SPFS) lack full international compatibility. 📌 Example:
  An Indian company wants to pay a Brazilian supplier in Bitcoin, but Indian crypto regulations complicate compliance.

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7. Time Zones and Non-Uniform Work Weeks

Issue: Time zone differences lead to processing delays, especially if several banks are involved.

• Banks work at different hours, and weekends vary (e.g., Fridays off in the Middle East).
• Some systems (e.g., TARGET2 in Europe) only operate on business days. 📌 Example:
  A Friday-evening transfer from China to the US may only be processed Monday due to time differences and weekend gaps.

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Conclusion: How Are These Issues Addressed?

✅ 1. Alternative payment systems – e.g., CIPS (China), SPFS (Russia), PAPSS (Africa).
✅ 2. Use of stablecoins and crypto – to bypass banking restrictions.
✅ 3. CBDC development – to speed up cross-border payments.
✅ 4. Optimization of bank correspondent accounts – tighter interbank cooperation.
✅ 5. Regional payment agreements – e.g., settlements in national currencies without USD. Cross-regional payments involve challenges: currency conversion, regulations, sanctions, fees, and infrastructure mismatches. But fintech innovation and regional initiatives are reducing these barriers, making international payments faster and cheaper. You can always consult specialists from the International Payment Alliance regarding cross-border transactions.