New cross-border payment model from MIPT reduces transfer fees to 1%

Ilya Prokofiev, a master's student at MIPT, has developed a model for cross-border payments that can reduce transaction fees from 7% to 1% and speed up their execution to a few seconds. The development was presented as part of a scientific work in Moscow.

The model is based on the use of central bank digital currencies and algorithms of automated market makers (AMM), which operate as a digital exchange point. This eliminates several intermediate links from the payment chain - correspondent banks and international payment systems.

In the existing system, an international payment can take up to five days through several intermediaries, which leads to high costs. According to experimental calculations, the new technology can halve operating costs and reduce total transaction costs to 1%. At the same time, the development remains compatible with current regulatory requirements.

It is noted that the main beneficiaries of the system could be developing countries with high costs for international transfers. The development can be applied in pilot projects with the participation of the Bank of Russia. The author of the study plans to continue it in graduate school at MIPT to study the model's resistance to market fluctuations. The results of the work will be published in scientific articles.

AMM is a special computer program that works as an autonomous exchange point. Instead of waiting for a buyer and seller to be found, as on a regular exchange, the program itself automatically determines and issues a price for the exchange of assets (for example, currencies), based on mathematical formulas pre-programmed into it and the current amount of these assets in the system.

Simply put, it is a "digital robot exchanger" that provides liquidity and allows transactions to be carried out quickly and without an intermediary.

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