BRICS Pay: The New International Payment System Explained

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Introduction.

BRICS Pay is suddenly getting a lot of attention.

This is a new digital payment system introduced by the BRICS countries that establishes a framework for international payments using currencies other than the dollar.

Since this may become an important topic for investment in U.S. stocks in the future, we have investigated the details of this issue.

This article provides a summary of our research into the concept and structure of BRICS Pay.

What is BricsPay?

BricsPay is an international digital payment platform by the BRICS countries (Brazil, Russia, India, China, and South Africa).

The fundamental purpose of the system is to facilitate international trade and financial transactions among member countries and to reduce their dependence on the U.S. dollar.
In particular, the goal is to eliminate the influence of the dollar and increase economic independence by promoting trade directly using each country's currency.

BricsPay is designed to replace existing international payment systems such as SWIFT and uses a decentralized system based on blockchain technology.

A mechanism is in place that allows member countries to make settlements without relying on third parties and avoid the risk of sanctions and blocking of financial transactions.
In particular, Russia and China are actively promoting this system, which could be an attractive option for countries under economic sanctions.

BricsPay is positioned as an important tool to accelerate the de-dollarization of the financial system among the BRICS countries, facilitating trade settlement using each country's own currency.

The platform aims to reduce trade costs and make trade between member countries more efficient while ensuring economic autonomy

When did the idea of BricsPay begin? How was it born?

The BRICS Pay initiative was officially launched in,2018The first is.
This project was designed to help the BRICS countriesReduce dependence on the dollar in international trade and encourage countries to settle payments in their own currenciesIt was created for the purpose of

Several important factors led to the development of this concept.

De-dollarization needs

The BRICS countries have long had concerns about the hegemony of the U.S. dollar.
Especially in international trade and financial transactions.Avoid the impact of U.S. sanctions and regulationsTherefore, there was a growing need for a settlement system that was not dependent on the dollar.
Russia and China had a strong interest in promoting trade settlement systems in their own currencies to circumvent U.S. sanctions.

Breaking away from dependence on SWIFT

The international financial settlement system SWIFT was under the influence of the United States and faced the risk of being excluded from SWIFT, especially by sanctioned countries such as Russia and Iran.
BRICS Pay replaces SWIFTAutonomous international settlement platformand reduce political risk.

Trade promotion among emerging market countries

The BRICS countries placed a high priority on strengthening their economic ties with each other and facilitating trade among emerging market countries. Each country could reduce exchange rate risk and trade costs by trading directly in its own currency.
For this reason, BRICS Pay isTools to promote trade among emerging market countriesIt is also positioned as a

Against this backdrop, BRICS Pay was conceived as an important tool to enhance the economic autonomy of the BRICS countries and was developed with the goal of achieving international trade independent of the U.S. dollar and the Western financial system.

How does BRICS Pay operate?

BRICS Pay is a digital payment platform that employs a distributed ledger based on blockchain technology.

This mechanism will allow for quick and secure international transactions without relying on the traditional centralized settlement system.
In particular, it is designed as a new alternative to international payment networks such as SWIFT, allowing transactions to be made directly in the currencies of member countries.

In operation, settlement is conducted using each country's own currency, allowing transactions that do not depend on currencies such as the U.S. dollar or the euro. It can stimulate trade among member countries and avoid risks such as financial sanctions and asset freezes.

The system is positioned as an important tool for Russia and China in particular to strengthen their economic independence and to reduce dollar dominance in financial markets.

As a specific mechanism, an application for smartphones also exists, designed to allow users to make payments seamlessly between member countries.
For example, major financial institutions such as Russian banks (Sberbank, VTB, etc.) and Chinese banks (Industrial and Commercial Bank of China and Bank of China) have already integrated into this system, allowing real-time transactions.

This distributed ledger-based system is unique in that, unlike central bank digital currencies (CBDCs) or virtual currencies, it uses the legal tender of each country directly.
Mechanisms have been established to encourage countries to use their own currencies while at the same time mitigating the impact on the international financial system.

How will BRICS Pay affect the US dollar?

The introduction of BRICS Pay could have important implications for the international influence of the US dollar.
In particular, the BRICS countries are promotingde-dollarizationAs part of the "The World Bank's Globalization of the Dollar," this payment system is intended to reduce dependence on the dollar and encourage countries to conduct transactions using their own currencies.

Trade and financial transactions among the BRICS countries may be conducted without the use of dollars, reducing the frequency of dollar use in international markets.

The main possible impacts are as follows

• Decrease in dollar hegemony:.BRICS Pay allows for dollar-avoiding payments, thereby reducing the use of dollars in international trade and investment. In particular, countries that have been subject to U.S. financial sanctions, such as Russia and China, will have a system that does not depend on the U.S. dollar, thereby increasing their efforts to challenge the international hegemony of the dollar.
• Implications for U.S. monetary policy:.As the BRICS countries become less dependent on the dollar, the ability of the U.S. to influence other countries through monetary policy may be weakened. For example, as the dollar is used less in international trade, the impact of U.S. interest rate policy and inflation on other countries will be reduced.
• Reinforcing pressure for dollar depreciation:.It has also been noted that the increasing de-dollarization using BRICS Pay could reduce the demand for dollars and lower the value of the U.S. dollar.
  This is due to the fact that some transactions in international markets are conducted in currencies other than the dollar, which lowers the demand for dollars.
• Transformation of the International Financial System:.BRICS Pay is also seen as an alternative payment system to SWIFT and serves as a means of circumventing financial sanctions. The effectiveness of financial sanctions exercised by the U.S. may be reduced, and the dominant position of the U.S. in the international financial system may be shaken.

Thus, the emergence of BRICS Pay could challenge the global influence of the U.S. dollar and threaten its supremacy in the long run. However, the extent to which this impact will grow will depend on how widespread BRICS Pay becomes and how other countries respond.

What makes BRICS Pay different from existing SWIFT and other international payment systems?

BRICS Pay has several important differences compared to existing international payment systems, especially SWIFT. The differences are summarized below.

• Differences in centralization:.SWIFT is a messaging system for international interbank communication and settlement and does not directly process specific settlements.
  In contrast, BRICS Pay is based on blockchain technologydistributed ledgerto allow direct settlement without the need for a central governing body. This allows transactions to take place transparently and quickly in real time.
• Currency dependent differences:.The majority of international transactions using SWIFT are conducted in major currencies such as the U.S. dollar and the euro, which reinforces the dominance of the dollar in international financial markets. On the other hand, the BRICS PayMember country's national currencyto conduct trade. This will reduce dependence on the U.S. dollar and the euro and allow for more autonomous trade and transactions among the BRICS countries.
• Avoiding sanctions and political risk:.SWIFT is often influenced by the U.S. and Europe, and there is a risk that certain countries may have their access restricted or sanctioned for political reasons.
  In particular, countries excluded from SWIFT, such as Russia and Iran, have been greatly affected. On the other hand, BRICS Pay isde-dollarizationand financial sovereignty, and is designed to avoid the risk of sanctions like SWIFT. The main difference is that transactions can continue without being affected by political pressure.
• Differences in technological infrastructure:.SWIFT is a traditional messaging system, and the payment processing itself is done between banks, which can be time consuming. In contrast, BRICS Pay is ablockchain technologyis utilized, and payments are made more quickly and at lower cost. Blockchain also increases the transparency and security of payments and makes it easier to track transactions.
• Participating countries and target markets:.SWIFT is a global payment network, with banks from all over the world as members, whereas BRICS Pay operates primarily in the BRICS countries and their partner countries.
  While the number of countries participating in BRICS Pay may increase in the future, the focus at this time is on the BRICS countries and surrounding emerging markets.

Because of these differences, BRICS Pay has different operational policies and goals than existing international payment systems, such as SWIFT, and is expected to be an important tool for reducing dependence on the dollar and strengthening economic independence among the BRICS countries, among others.

What are the advantages and disadvantages of using BRICS Pay?

The advantages and disadvantages of using BRICS Pay are described below.

Advantages

• De-dollarization:.BRICS Pay reduces dependence on the U.S. dollar and allows member countries to transact directly in their own currencies, thus breaking away from the dominance of the dollar in international trade and financial transactions. This will allow them to avoid the effects of U.S. monetary policy and sanctions.
• International Trade Efficiency and Cost Reduction:.BRICS Pay uses blockchain technology, which allows for real-time transactions. Transaction fees are expected to be lower and transaction times shorter than those for international payments via conventional SWIFT. It will improve the efficiency of international transactions between companies, which will be a great advantage, especially for small and medium-sized enterprises.
• Financial sanctions and risk aversion:.BRICS Pay avoids the risk of certain countries being excluded from SWIFT, allowing transactions to continue even in countries under sanctions. This allows BRICS countries to conduct transactions while maintaining their economic independence.
• Increased transparency and safety:.Based on blockchain technology, transactions will be more transparent, making fraud and tampering with transactions more difficult. The decentralized system also reduces the risk of being affected by failures of central institutions.

demerit

• Difficulties in dissemination:.BRICS Pay is still in the early stages of implementation, and sufficient infrastructure and system dissemination are issues to be addressed. It is necessary to develop uniform technical standards and regulations among countries, and unless this progress is made, it will be difficult for the system to spread on a large scale.
• Concerns about transaction security:.Although blockchain technology is considered safe, it still does not completely eliminate concerns about new technology and risks such as cyber attacks. Especially in financial transactions, users may have concerns about the new technology.
• Political Risks:.BRICS Pay is primarily targeted at the BRICS countries and their partners, and this could be an obstacle when dealing with countries with which there are political conflicts. In addition, the risk of opposition from other countries to changes in international financial markets and the risk of stricter regulations must also be considered.
• System reliability and adoption rates matter:.Since BRICS Pay has only been in practical use for a short time, there are many unknowns regarding the reliability and stability of the system. The degree to which businesses, banks, and consumers trust and adopt the system will be the key to its success, but its widespread adoption will likely take time.

Overall, BRICS Pay can be an important economic tool for BRICS countries, but technical and political challenges must be overcome.

How widespread is BRICS Pay?

Although BRICS Pay is still in its early stages of adoption, it is steadily being introduced in the BRICS countries and partner countries.

In October 2024, 159 countries have pledged to participate.

• Introduction in major BRICS countries such as Russia and China
  BRICS Pay is being actively adopted, especially in Russia and China. Major Russian banks such as Sberbank and VTB have integrated BRICS Pay into their own financial systems, allowing their customers to use this system for international payments. In China, the Industrial and Commercial Bank of China (ICBC) and Bank of China are also using BRICS Pay for cross-border transactions.
• Progress in adoption in other BRICS member countries
  In Brazil, Petrobras has been reported using BRICS Pay for international transactions. In South Africa, South African wine has also been confirmed to have been purchased through the BRICS Pay app by a retailer in Moscow.
• Expansion in emerging markets
  BRICS Pay is spreading to non-BRICS member countries. In particular, Argentina, Iran, and Saudi Arabia are new BRICS members and are expected to spread in the future. Penetration into emerging markets such as the Middle East and Africa is likely to continue.
• Infrastructure development and technological progress
  Cross-border payments using mobile applications are progressing in many countries, especially in China and India, where integration with existing payment infrastructures is gaining momentum. For example, in India, the National Bank of India has rolled out a mobile payment application using BRICS Pay, which can be easily used by consumers and businesses.

Challenges and Prospects

At this stage, there are still many challenges to the widespread use of BRICS Pay. Technical coordination and regulatory unification among countries are needed, and widespread use, especially at the SME and consumer levels, will take time. However, as the trend toward avoiding economic sanctions and de-dollarization intensifies, there is a strong possibility that its widespread use will accelerate in the future.

What is the status of diffusion in each country and what is the role of China and Russia in particular?

While BRICS Pay penetration varies from country to country, China and Russia are playing a particularly active role.

China's Role

China is one of the strongest proponents of BRICS Pay, especially inInternationalization of the RenminbiIt occupies an important position in the
By utilizing BRICS Pay, the Chinese government aims to create an international payment system that is less dependent on the dollar. It also hopes that the expanded use of the renminbi will strengthen China's influence in international financial markets.

Specifically, China'sIndustrial and Commercial Bank of China (ICBC) and Bank of Chinahave already adopted the system and are using it for cross-border payments among BRICS member countries. This enables financial institutions in China to conduct transactions with other BRICS countries more quickly and at lower cost. China has also shown leadership in technology, contributing to the development of BRICS Pay by promoting the use of blockchain technology and digital currencies.

Role of Russia

Russia is another major proponent of BRICS Pay, especiallyExclusion from SWIFTThis is the background that is accelerating this movement. Russia has been locked out of SWIFT as part of sanctions over its invasion of Ukraine, and an alternative international payments system is needed. BRICS Pay is seen by Russia as an important means of getting around sanctions and is seen as key to breaking its dependence on the dollar.

Russia.Sberbankand ... andVTBand other major banks have already integrated BRICS Pay into their own financial systems, which makes transactions in and out of Russia fast and secure. The widespread use of BRICS Pay has also strengthened Russia's economic ties with other BRICS countries, allowing it to trade without using dollars.

Diffusion in other BRICS countries

Other BRICS countries, especiallyBraziland ... andSouth AfricaBut BRICS Pay is also being introduced. In Brazil, energy companiesPetrobrasis using BRICS Pay for cross-border transactions, and consumer services have been launched in South Africa, where BRICS Pay is used for retail payments.

Future Outlook

The future spread of BRICS Pay will be driven by potential new BRICS members.Saudi Arabiaand ... andIranIt is expected to spread to countries such as This will allow BRICS Pay to penetrate emerging markets such as the Middle East and Africa, potentially creating a new trend in the international payments system.

Although BRICS Pay is still in its infancy, China and Russia are playing a central role in its promotion, and other BRICS countries are gradually following suit. In particular, China's technological prowess and Russia's need to avoid sanctions are driving the expansion of this system.

How will international trade change with the introduction of BRICS Pay?

With the introduction of BRICS Pay, international trade could change significantly as follows

Trade efficiency and cost reduction

BRICS Pay is a decentralized payment system using blockchain technology, which allowsSignificantly reduces trade time and costsThe company is now in the process of developing an international settlement system through SWIFT. With traditional international payments through SWIFT, the process is complicated and time-consuming due to the need to go through multiple banks, and the fees are high. With BRICS Pay, on the other hand, transactions are completed in real time,Settlement fees are also significantly reduced.The company will do the following. This is expected to speed up international transactions between companies.

Currency risk mitigation

One of the features of BRICS Pay is,Payment can be made in each country's local currencybe. This reduces the exchange risk between currencies and allows transactions that are not dependent on dollars or euros. In particular, in transactions with countries with high exchange rate risk, the risk can be significantly reduced because transactions can be conducted in the home currency without involving the dollar. This mechanism will improve the stability of international trade and reduce trade costs.

Trade expansion among emerging market countries

BRICS Pay is a payment system focused on BRICS countries and emerging markets, which allowsTrade among emerging market countries facilitatedThe BRICS Pay system will be used for international payments. Traditionally, these countries have relied on dollars and euros for international payments, but with BRICS Pay,Increased opportunities to trade directly in your own currencyThe BRICS countries are also expected to become more economically connected. This is expected to strengthen economic ties and facilitate trade flows among the BRICS countries and emerging markets.

Freedom from political and economic constraints

BRICS Pay isAvoiding the risk of political sanctionsIt also offers the important advantage of For countries that are particularly vulnerable to financial sanctions imposed by the United States and the European Union, the introduction of BRICS Pay without reliance on SWIFT provides a means to reduce risk in international trade. For example, countries that have experienced exclusion from SWIFT, such as Russia and Iran, will be able to use BRICS Pay to maintain trade, and to reduce their dependence on SWIFT,Mitigating the Impact of Sanctions(2) The company may

Acceleration of de-dollarization

What is the introduction of BRICS Pay?de-dollarizationThe BRICS countries aim to reduce their dependence on the dollar by conducting their international trade in their own currencies without the U.S. dollar. This will limit the impact of U.S. monetary policy and fluctuations in the value of the dollar on trade,economic autonomyIt is possible to increase the

The introduction of BRICS Pay will not only make international trade more efficient and reduce transaction costs, but also reduce currency and political risks. In particular, the dynamics of international trade could change significantly as trade among emerging market countries expands and becomes less dependent on the U.S. dollar.

What is the future of BRICS Pay?

The future of BRICS Pay will depend on several important factors.
Below are the main prospects for the future of BRICS Pay.

Progress in de-dollarization

One of the primary goals of BRICS Pay is to reduce the dominance of the U.S. dollar in trade among the BRICS countries. As BRICS Pay becomes more widespread, international settlement mechanisms that are less dependent on the dollar may expand, gradually weakening the dollar's international position. In particular, BRICS Pay will play an important role as part of an aggressive de-dollarization effort by large countries such as Russia and China.

Expansion in emerging markets

BRICS Pay is attracting attention in emerging markets as a new alternative to the existing SWIFT payment method. Currently, in addition to the BRICS countries (Brazil, Russia, India, China, and South Africa), new member countries such as Argentina, Iran, and Saudi Arabia are being added, expanding the scope of BRICS Pay use. It will enable emerging market countries to conduct international transactions without relying on the U.S. dollar.

Development and diffusion of blockchain technology

BRICS Pay is a decentralized system based on blockchain technology, which increases the transparency and security of transactions. As blockchain technology further evolves and the speed and cost of transactions are optimized, the attractiveness of BRICS Pay is expected to increase further. In particular, demand is likely to increase for this secure means of payment that is not dependent on other countries.

Multipolarization of international financial markets

The expansion of BRICS Pay could facilitate the multipolarization of international financial markets. A new economic bloc may be formed as BRICS countries expand payments using their own currencies, as opposed to the traditional international payment system centered on the U.S. dollar and the euro. This move could not only shake the hegemony of the dollar, but could also provide an opportunity for other currencies and regional economic blocs to gain strength.

Risks and Challenges

On the other hand, there are several challenges to the widespread adoption of BRICS Pay. Technical coordination among countries, unification of regulations, and development of financial infrastructure are necessary, and until these are resolved, it will be difficult to introduce the system on a large scale. It is also true that there are many challenges to overcome, such as political risks and distrust of blockchain technology.

BRICS Pay could play a major role in the future in reducing dependence on the US dollar and providing new options for international payments. However, its success will depend on technological arrangements and cooperation among countries, as well as trends in international financial markets. In particular, its spread in emerging markets and the development of blockchain technology will be key to its future adoption.

What are the risks and opportunities of international economic volatility due to BRICS Pay on the U.S. investment environment?

International economic volatility due to BRICS Pay presents both risks and opportunities for the U.S. investment climate.

risk

• Decline in dollar hegemony: With the advent of BRICS Pay, transactions between BRICS countries will be conducted directly in their own currencies without the use of the U.S. dollar,Declining international dominance of the U.S. dollarThere is a possibility that the U.S. dollar will weaken. This would reduce demand for the U.S. dollar and risk a weakening of the dollar in the long run. A decline in the value of the dollar could increase the cost of U.S. imports and increase inflationary pressures, which would affect the international competitiveness of U.S. firms.
• Decreasing influence of financial sanctions: The spread of BRICS Pay may diminish the effectiveness of U.S. financial sanctions. Traditionally, the U.S. has implemented economic sanctions through SWIFT and other means, but the spread of alternative payment systems such as BRICS Pay will make it easier for sanctioned countries to avoid U.S. influence. This increases geopolitical risk,Risk of political instability negatively impacting U.S. marketsmay increase.
• Strengthening competitiveness in emerging markets: If BRICS Pay becomes widespread among emerging market countries, these countries could weaken U.S. influence. Especially as BRICS countries and partner countries grow their economies independent of the U.S. market and become more competitive as international investment destinations,Risk of reduced capital inflows into the U.S. equity marketexists.

opportunity

1. Expansion of new investment opportunities: BRICS Pay aims to promote trade and investment in emerging markets, and with this moveIncreased investment opportunities in emerging market countriesdo. For U.S. investors, the economic growth of the BRICS countries is expected to provide greater opportunities to enjoy investment returns in these markets. In particular, investment opportunities are likely to increase in the energy, technology, and financial sectors.
2. Investment in growth areas through the diffusion of blockchain technology: BRICS Pay is based on blockchain technology, and the widespread adoption of this technology will create growth opportunities for blockchain-related companies and companies providing digital financial infrastructure. U.S. investors by investing in companies that are leading the development of this technology and companies that will benefit from the new technology in international payment infrastructure,High returns in the technology sectorThere is a possibility of obtaining
3. Investment diversification benefits in a multipolar market: The proliferation of BRICS Pay will promote the multipolarity of international financial markets, making it more attractive to U.S. investors vis-à-vis emerging markets and other non-dollar markets.Allows diversification of investment riskThis would be the case. This reduces the specific economic risk of the U.S. market and its dependence on the U.S. dollar.

BRICS Pay presents both risks and opportunities in the U.S. investment environment.
While risks such as declining dollar hegemony and weakening influence of financial sanctions exist, opportunities to invest in emerging markets and in growth areas due to the proliferation of blockchain technology will also increase.
For U.S. investors, strategies to diversify risk and take advantage of investment opportunities in growth areas are required, while carefully monitoring these changes.

summary

We delved into the details of how BRICS Pay works, its conception, and its future.
At this point, BRICS Pay is still in the early stages of implementation and is a developing system, but many countries have already expressed interest in this international payment framework, and the impact of future developments on the global economy cannot be ignored.

The dollar's status as a reserve currency has been supported by the fact that oil money, especially oil transactions, are conducted in dollars, but the emergence of BRICS Pay could significantly change this structure.

How this new mechanism of digital payments will develop in the field of international payments should be watched closely.