10/22/24 BRICS Pay launches, will be a global payments game changer

The BRICS Pay system has been launched, with immediate implications for the future role of the US dollar, and the use of financial sanctions upon other countries. The system bypasses the US controlled SWIFT payments system, disregards the US dollar as a preferred currency and allows instant settlement in sovereign currencies instead.  It is likely to be followed, in time, by digital sovereign currencies.

BRICS Pay is a decentralised and independent payment messaging mechanism system under development by the BRICS member states, and is similar to the SWIFT payments interface. BRICS Pay is a joint venture between the BRICS member states to receive and make payments in their own local currencies.

It was originally launched in 2018 by the BRICS Business Council. The team that cooperatively runs BRICS Pay consists of financial, banking technology experts from the original founding nations of BRICS — Brazil, Russia, India, China and South Africa. The purpose of BRICS Pay is to make international payments less costly and complicated, encouraging international cooperation between the growing crowd of BRICS members. In January this year, the original five BRICS members were joined by Egypt, Ethiopia, Iran, and the UAE. More members — a further 30 countries have applied to join — are expected to bee announced at the 2024 BRICS summit which takes place from 22-24 October.  

According to the BRICS Pay website, numerous government, and respective technological, financial, legal, and consulting firms have united to form the BRICS Pay Consortium, operating under the principles of a decentralised autonomous organisation (DAO).

“The Consortium adheres to the regulations of each country where its members operate,” the website further states. “It is a network-based entity without a central headquarters. The Consortium’s membership is not publicly disclosed.”

According to BRICS Pay, “The Bretton Woods-era global financial system is undergoing a significant transformation. We are witnessing rising global debt, increasing wealth inequality, and the fragmentation of trade and finance systems. Our goal is to ensure equal access to financial technologies and global wealth, providing everyone with the opportunity to reach their full potential. Today, we begin building a new, fair, and decentralised financial system for the future.”

The BRICS Pay project aims to facilitate seamless transactions between member states and provide an alternative to existing global financial infrastructure dominated by Western systems like SWIFT. The key objective is to foster financial cooperation among the BRICS nations and reduce dependency on the US dollar in trade settlements, thus creating a multipolar financial world order.

It means that with a decentralised, autonomous system, users can bypass the use of the US dollar and Euro and use their own currencies. Transactions will be immediately settled at the prevailing currency exchange rate, with no additional mark ups, or need for corresponding banks. It means that a buyer in China can receive a QR code for payment from a Russian vendor, accept it, and the money then auto deducted in Chinese RMB Yuan from the Chinese account and instantly deposited in Russian Rubles to the Russian users account.

BRICS Pay accounts can be set up easily on your smart phone, linked to your respective bank account or other financial platform, while payments are made via an auto-generated QR code, and shown to the recipient who scans that and completes the transaction. 

This has obvious implications for the sanctions issued on countries such as Iran and Russia, who can now make payments in their respective sovereign currencies instead. These currencies — and those of most of the BRICS countries — are also based on real assets, rather than debt, which is the case in the United States. It is a parallel financial system that completely bypasses the need for U.S.-controlled financial institutions.   

The ultimate vision for the system is cross-border retail support across the BRICS+ bloc. Future plans are to examine business-to-business payments and then develop the BRICS+ UNIT, being the crypto proposition for the block.

The BRICS Pay system still needs to be rolled out however, with BRICS members banks, corporate and individual accounts all requiring connectivity. That process will take time, with the BRICS pay app on your phone probably not a useable feature until 2028.  However, there have been reports that in Russia, a BRICS Pay service for non-cash payments for foreigners may appear in Russia this year. BRICS Pay will make it possible to pay with Visa and MasterCard cards inside Russia and, in the future, with the MIR card beyond its borders. 

Source: portal "Russia's Pivot To Asia"