BRICS - Pay

Syllabus Areas:

GS II - International Relations

GS III - Economy

Over recent years the global finance system has quietly begun to shift. The dominance of the U.S. dollar and Western-led payment infrastructure is being challenged by emerging economies seeking financial sovereignty. One of the most striking developments is the proposed payment system known as BRICS Pay — a cross-border settlement mechanism being designed by the BRICS bloc (Brazil, Russia, India, China, South Africa) to reduce dependency on the established messaging network SWIFT. The implications for India’s economy, banking sector, currency strategy and global footprint are significant and merit careful study.

The Global Payment Infrastructure & Why It Matters

SWIFT and the Status Quo

  • SWIFT, headquartered in Belgium, is the global standard for bank-to-bank messages for cross-border payments and trade settlement. It connects over 11,000 institutions in more than 200 countries.
  • Being “outside” or excluded from SWIFT can make a country subject to de facto economic isolation (as seen with Russia following the Ukraine invasion).

Why Emerging Powers Want Alternatives

  • Dependence on a system influenced by Western institutions means vulnerability to sanctions, policy shifts and “weaponised finance
  • Using local currencies and alternative payment rails cuts costs, reduces intermediary fees, and strengthens autonomy.
  • For the BRICS bloc this is part of a broader agenda of creating a multipolar financial architecture rather than a unipolar system dominated by the dollar

The BRICS-Pay Initiative: What Is It?

  • In 2024-25 the BRICS leadership endorsed the prototype of BRICS Pay in the city of Kazan (Russia) during their summit.
  • The system is being built on the combined digital infrastructure of member countries: e.g., India’s UPI, China’s CIPS (Cross-Border Interbank Payment System), Russia’s SPFS, Brazil’s Pix.
  • The aim: set up an interoperable payment and settlement network among BRICS nations (and possibly beyond) that:
    • Supports local currency settlements (reducing dollar dominance)
    • Offers cross-border transfers outside SWIFT control
    • Cuts transaction costs and time for intra-BRICS trade
    • Enhances financial resilience against sanctions or external pressure

Strategic Motivations & Why India Should Care

De-dollarisation and Currency Strategy

One of the compelling motivations is to weaken the over-reliance on the U.S. dollar in trade, finance and reserves. For India — which has one of the largest external sectors in the world — this gains importance:

  • Reducing transaction cost vulnerabilities in exports/imports
  • Greater predictability in settlements
  • Mitigating currency‐mismatch risk
    However, shifting away from the dollar is easier said than done. The dollar retains massive liquidity, trust, depth and network effects.

Enhancing India’s Role in Global Finance

India can leverage the BRICS-Pay initiative to:

  • Export its digital payments know-how (UPI has already begun global outreach)
  • Gain leverage in trade negotiations by offering settlement alternatives
  • Strengthen its voice in reforms of global financial governance (like the IMF, World Bank) – part of GS 2 relevance.

Banking Sector / Financial Architecture Impacts

On the banking side, Indian banks may see:

  • New correspondent banking opportunities with BRICS partners
  • Need to upgrade infrastructure for cross-border settlement in local currencies
  • Risk & compliance implications if multiple payment rails evolve (co-existing with SWIFT)
  • The possibility that the growth of an alternative payment system may shift transaction flows away from traditional brokers/intermediaries.
BRICS - Pay

Challenges & Roadblocks

While the vision is grand, the practical hurdles are real.

  • Interoperability and Technical Complexity
    • Combining disparate national payment systems (each with its own governance, regulatory norms, technology stack) into a smooth interoperable platform is non‐trivial.
  • Divergent National Interests
    • BRICS members have different economic sizes, currencies, regulatory environments, and geopolitical alignments. Achieving cohesion will be difficult. Brazil and India have been cautious of being seen purely as China / Russia vehicles.
  • Dominance of the Dollar & Trust Factors
    • Even if BRICS-Pay works within the bloc, for it to disrupt the dollar-centric system requires deep trust by global financial markets. The dollar’s dominance is backed by decades of network effects, liquidity, and institutions.
  • Regulatory, Legal and Sanctions Risks
    • The very reason for such alternative rails is exposure to sanctions. Partner countries may themselves draw sanctions risk (e.g., for dealing with Russia). India must tread carefully so as not to jeopardise its larger global financial and trade relations.

Implications for India

Foreign Trade & Currency Settlements

India’s trade with BRICS and other emerging economies may increasingly shift towards local-currency settlements rather than always defaulting to USD/Euro. This could reduce cost, currency risk, and exchange rate dependency.
India would need to:

  • Strengthen its currency markets, hedging instruments
  • Increase trade corridors with BRICS partners in INR, Yuan, etc
  • Align with infrastructure for digital settlement.

Banking & Payments Infrastructure

Banks and fintech firms in India should gear for:

  • Integration with BRICS-Pay rails, or partners
  • Upgradation of compliance, settlement engines
  • Innovation in cross-border payments products leveraging UPI and partnerships.

Strategic Autonomy & Financial Resilience

For India’s national interest, a more diversified payments architecture means:

  • Reduced vulnerability to being “excluded” from global systems if allied or subject to sanction-pressure
  • Greater bargaining power in global financial governance
  • Potentially more favourable settlement terms and reduced transaction fees for Indian importers/exporters.

Risks & Mitigations

  • Transitioning carelessly could fragment India’s financial footprint and increase complexity.
  • Over-reliance on a new BRICS rail may expose India to new dependencies (e.g., China or Russia dominate the network)
  • Need to maintain dual integration: with existing global systems (SWIFT, correspondent banks) and new ones — so flexibility is key.

The BRICS-Pay initiative is more than a payment system—it is a signal that major emerging economies want a bigger say in the rules of global finance. For India, this offers opportunity and risk in equal measure. Our banking sector, trade architecture, digital payments ecosystem and external trade strategy all stand to be affected. The key is not to hitch all our hopes to a single alternative, but to keep robust ties with the existing system while selectively moving into new rails that enhance our autonomy and reduce vulnerability. As the global financial map gradually rewrites itself, India must not just ride the wave — it must help steer it.