BRICS Pay to Arrive in October: Can This Blockchain-Based Payment System Challenge Western Financial Dominance?

Key Takeaways

• The BRICS Nations developed a new payment system to reduce their reliance on Western financial systems.
• Over 150 countries have expressed interest in adopting BRICS Pay once it’s operational.
• The new payment card was unveiled during the group’s meeting in Moscow.
• BRICS Pay must attract businesses and consumers within and beyond the BRICS Nations.

As the BRICS nations rolled out their highly anticipated BRICS Pay system in October, the question on everyone’s mind is: can this blockchain-based payment network truly challenge the Western financial dominance that has long reigned supreme?

The answer will depend on whether the new system, designed to simplify and secure cross-border transactions, can convince businesses and governments outside the BRICS bloc to join its ranks and defy traditional financial powers.

What Is BRICS Pay?

BRICS is developing BRICS Pay, a payment system to simplify cross-border transactions among its members. This initiative seeks to reduce transaction costs and time and decrease reliance on Western financial systems. But also shield economies from currency fluctuations and geopolitical tensions.

What Is BRICS Pay: All You Need To Know

BRICS Pay promises benefits like cost efficiency, faster and more convenient transactions, enhanced economic resilience, stronger collaboration, and greater financial inclusion.

The system operates on blockchain technology, offering a secure and transparent way to record transactions. It must also integrate smoothly with existing payment platforms like India’s UPI and Russia’s Mir, facilitating seamless cross-border transactions. The platform may use real-time currency conversion or a stable exchange mechanism to manage currency exchanges effectively.

Currently, the group countries have implemented basic solutions, including financial messaging, message conversion, BRICS CBDC, settlements, and clearing, to advance the development of BRICS Pay.

Latest Updates

Central Bank of Russia Governor Elvira Nabiullina  announced that 159 countries will adopt the new payment system once it becomes operational. These nations are also exploring the expansion of Russia’s system for transmitting financial messages (SPFS). Nabiullina described the latter as an “alternative to SWIFT.”

She emphasized the importance of partner BRICS Nations’ interest and technical readiness in these discussions, noting that similar infrastructures exist elsewhere.

The BRICS payment system has gained increasing importance among member countries. And it is a top priority for the upcoming 2024 summit.

Viktoria Panova, head of the Russian BRICS Presidential Council, highlighted the active efforts to develop a financial payment mechanism to strengthen cooperation among these Nations while preserving their sovereign trade and economic exchanges. She emphasized that this issue is of critical importance to all member countries.

Launching the payment system will be a significant success. In fact, it will potentially open new business opportunities for the alliance.

With many Nations eager to join the group, they will likely embrace the system upon its launch, which is expected to be ready for the crucial summit in October.

Growing Interest in BRICS Payment Platforms

At a joint press conference  with Egyptian Foreign Minister Badr Abdelatty, Russian Foreign Minister Sergey Lavrov emphasized the appeal of these platforms for countries seeking to reduce their reliance on the dollar and euro. He noted that the platforms offer an opportunity to conduct trade, investment, and other economic activities without being subject to Western sanctions.

The BRICS nations are actively developing payment systems to circumvent Western-controlled systems like SWIFT. Initiatives such as BRICS Pay, BRICS Bridge, Russia’s SPFS, and a proposed financial messaging system are aimed at promoting local currency settlements and reducing dependence on Western currencies.

Lavrov  underscored the importance of these systems for maintaining economic independence and mitigating the risk of sanctions. He warned that the increasing use of Western currencies as political tools has created a sense of unease among nations. “Anyone could face sanctions from the United States or other Western countries,” he stated.

By diversifying their payment options, countries can safeguard their financial operations and reduce their vulnerability to geopolitical pressures. The expansion of BRICS further strengthens the bloc’s position as a global economic force. Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE may soon join the group.

Payment Card Unveiled

BRICS Pay officially launched  at the BRICS Business Forum in Moscow, aiming to transform financial transactions within the group by providing an independent and cost-effective alternative to traditional payment systems. Participants received demo cards loaded with 500 rubles, usable at various locations within the World Trade Center.

To implement BRICS Pay, a coalition of technological, financial, legal, and consulting firms formed the BRICS Pay Consortium, operating as a decentralized autonomous organization (DAO). The Consortium adheres to the regulations of each member’s home country and functions as a network-based entity without a central headquarters, with its membership kept confidential.

By creating a unified payment platform, BRICS Pay is designed to facilitate seamless transactions among member countries—Brazil, Russia, India, China, and South Africa. The DAO is governed by smart contracts and blockchain-encoded rules, enabling decentralized decision-making and enhancing transparency. The platform may use digital currencies or stablecoins to represent the national currencies of the member states. This will minimize transaction costs and reduce reliance on traditional banking systems.

By ensuring interoperability between various payment systems, BRICS Pay allows users to conduct cross-border transactions without multiple intermediaries. The Consortium complies with each member country’s legal frameworks, ensuring legitimacy and trust. The system aims to enable quick and low-cost transactions, benefiting trade and investment among member countries. Users can register their payment cards using a QR code. Then, they can use the preloaded funds to make purchases at the Business Forum.

Risk for Western Dominance?

As said, with the launch of the new system, BRICS countries aim to counter Western’s dominance in traditional payment systems.

Bepi Pezzulli, financial expert and director of research at Italia Atlantica, told CCN: “The launch is part of a broader effort by these Nations to reduce their reliance on Western financial systems. In fact, the latter are often seen as tools of geopolitical influence. In my opinion, BRICS Pay faces significant hurdles.”

According to the expert, widespread adoption would be essential for BRICS Pay to thrive.

For Pezzulli, the system must attract businesses and consumers within the BRICS Nations and extend its reach to global markets.

Without broad acceptance, its impact could remain limited, failing to challenge the Western financial systems.

“Equally crucial is interoperability. It must integrate with existing financial infrastructures to facilitate international trade. Achieving this level of technical sophistication is a significant challenge, as the system needs to function smoothly across diverse regulatory environments, currencies, and market systems,” the researcher said.

“Moreover, the rise of BRICS Pay could face geopolitical risk. Western powers may actively resist its development. The challenge will be navigating this resistance while maintaining the stability and growth of the platform and shaping a multipolar financial world.”