International Relations
BRICS Pay: A Bid to Reduce SWIFT Dependence
- 06 Nov 2025
- 11 min read
For Prelims: BRICS, SWIFT System, BRICS Pay, Unified Payments Interface, New Development Bank
For Mains: BRICS as a multipolar financial actor, De-dollarisation and its impacts on economy, BRICS Nations Explore Alternative Currencies
Why in News?
BRICS is seeking to reduce Western dominance in global financial architecture by developing BRICS Pay, a cross-border payments framework intended to reduce reliance on the US–led Society for Worldwide Interbank Financial Telecommunication (SWIFT) system.
What is BRICS Pay?
- Background for BRICS led Financial System: BRICS began pursuing financial autonomy at the 2014 Fortaleza Summit by creating the New Development Bank and the Contingent Reserve Arrangement.
- US and EU sanctions on Russia in 2015 pushed members to explore greater use of local currencies, leading to currency-swap and settlement cooperation by 2017.
- This effort culminated at the 2024 Kazan Summit with the launch of BRICS Pay to boost local-currency cross-border settlements and strengthen intra-BRICS banking networks.
- BRICS Pay: It is a proposed cross-border payment system to facilitate trade and financial transactions among BRICS member nations using local currencies, thereby reducing dependence on systems like SWIFT and the USD.
- It is part of the BRICS Cross-Border Payments Initiative, aimed at increasing financial sovereignty, economic cooperation, and resilience against sanctions.
- Interoperability: BRICS Pay envisions interoperability between national payment platforms, including:
- Russia’s System for Transfer of Financial Messages (SPFS) alternative to SWIFT.
- China’s Cross-Border Interbank Payment System (CIPS), which has participants in 120+ countries.
- India’s Unified Payments Interface (UPI), a digital payments platform, gaining global traction.
- Brazil’s Pix, a real-time payment system widely used across Latin America.
SWIFT
- Founded in 1973 and based in Belgium, SWIFT is a secure global messaging network used by over 11,500 institutions across more than 200 countries and territories to transmit instructions for international money transfers.
- It does not move money itself but provides standardised encrypted messages to facilitate payments.
- The National Bank of Belgium (NBB) acts as the lead overseer of Swift, and is supported by the G10 central banks.
- Each participating bank is assigned a unique SWIFT code that identifies its institution, country, and location, ensuring fast and reliable communication.
- India has access to the SWIFT system, which allows its financial institutions to send and receive secure messages for international and domestic transactions
Why is BRICS Challenging SWIFT?
- Desire for Financial Sovereignty: SWIFT, as a key global financial infrastructure, is heavily tied to the USD and it is controlled by the G10 nations, which limits BRICS countries' influence in global financial systems.
- A BRICS-led alternative would ensure that member states have a greater say in the rules governing international finance.
- Protection from US Sanctions: SWIFT has been used by the US and its allies to impose economic sanctions on countries like Russia and Iran, limiting BRICS ability to access global financial markets.
- Geopolitical Motivations and Diversification: Rising geopolitical tensions with the West, especially involving Russia and China, have pushed BRICS to reduce vulnerability to Western financial pressure.
- BRICS also aims to deepen South–South cooperation by boosting economic ties with developing countries in Africa, Latin America, and Asia through alternative payment systems.
- This creates a strategic imperative to build a financial system less reliant on Western institutions.
What are the Challenges in the Implementation of BRICS Pay?
- Competing National Payment Priorities: BRICS members are promoting their own systems (China’s CIPS, India’s UPI) which can create friction when deciding whose framework should lead.
- China’s economic weight and the wider reach of CIPS (120+ countries) may raise concerns that BRICS Pay could effectively become China-led, making others more cautious.
- Political Rivalries: Tensions between India and China, particularly over India's reluctance to adopt CIPS in favor of UPI, may hinder cooperation. These geopolitical differences must be resolved for BRICS Pay to succeed.
- Technical Interoperability: These platforms currently operate differently. Aligning infrastructure, messaging standards, security protocols, and settlement mechanisms is complex and resource-intensive.
- Lack of Coordinated Monetary Policy: A shared payment architecture requires longer-term coordination on capital flows, exchange rates, and liquidity management, an area where BRICS countries have divergent priorities.
- External pressure: Threats of retaliation from the US such as tariff warnings, could deter some members from fully committing.
- Trust Deficit: Countries outside the BRICS bloc may be reluctant to adopt BRICS Pay due to geopolitical concerns, fear of retaliation from the West, or unfamiliarity with the new system.
- For BRICS Pay to succeed globally, it will need to secure partners beyond BRICS and convince other countries of its security and benefits.
What Measures Could Accelerate the Adoption of a BRICS Pay?
- Strategic Roadmap: A phased strategic roadmap for BRICS Pay should start with bilateral local currency settlements, then evolve into a digital payment network, expanding through regional partnerships in Africa, Latin America, and Central Asia to boost adoption.
- Incentivizing Participation: Offering benefits like reduced transaction costs compared to SWIFT and faster payments to countries and institutions will encourage adoption of BRICS Pay.
- Strengthening Interoperability: Ensuring compatibility between national payment systems (CIPS, UPI, Pix, SPFS) is crucial for smooth cross-border transactions.
- Political Consensus and Cooperation: Overcoming geopolitical rivalries (e.g., India-China tensions) and aligning national interests will help create a unified approach.
Conclusion
BRICS' challenge to SWIFT aims for financial independence, protection from sanctions, and a more inclusive global financial system. Through initiatives like BRICS Pay and stronger cooperation between national payment systems, BRICS seeks to create a more equitable financial ecosystem.
Frequently Asked Questions (FAQs)
1. What is BRICS Pay?
A proposed cross-border payments system enabling local-currency settlements among BRICS members to reduce reliance on SWIFT and the USD.
2. Why is BRICS challenging SWIFT?
To gain financial sovereignty, sanctions resilience, and rule-setting power, while diversifying payment rails beyond Western-overseen infrastructure.
3. Which systems would interoperate under BRICS Pay?
Russia’s System for Transfer of Financial Messages (SPFS), China’s Cross-Border Interbank Payment System (CIPS), India’s Unified Payments Interface (UPI), and Brazil's Pix will be linked for instant, secure, low-cost cross-border transfers.
UPSC Civil Services Examination, Previous Year Questions (PYQs)
Prelims
Q. Consider the following statements: (2016)
- New Development Bank has been set up by APEC.
- The headquarters of the New Development Bank is in Shanghai.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Ans: (b)
Q. The ‘Fortaleza Declaration’, recently in the news, is related to the affairs of (2015)
(a) ASEAN
(b) BRICS
(c) OECD
(d) WTO
Ans: (b)
Q. With reference to a grouping of countries known as BRICS, consider the following statements: (2014)
- The First Summit of BRICS was held in Rio de Janeiro in 2009.
- South Africa was the last to join the BRICS grouping.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Ans: (b)
Mains
Q. How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India? (2018)
