BRICS Pay: A New Era in Cross-Border Payments

Introduction

In an era of rapid shifts in global finance, the BRICS group (comprising Brazil, Russia, India, China, South Africa, and expanding membership) has launched a major initiative — BRICS Pay — aimed at re-shaping how cross-border payments are done. The core objective: enable transactions among member countries in local currencies, reduce reliance on the U.S. dollar, and bypass some of the traditional payment-rails dominated by Western institutions like SWIFT.

For businesses, especially those engaged in cross-border trade, financial or currency services, this development is extremely relevant. Given your work (company law, GST, tax) and target audience (Indian companies, service providers), an article analysing BRICS Pay’s implications for India, companies, taxation, compliance etc would serve very well.

Background: Why BRICS needed a new payments system

• The dominance of the U.S. dollar (USD) and systems like SWIFT has long been viewed as giving Western economies structural leverage in global finance — including via sanctions, correspondent-bank restrictions, and messaging-system controls.

• After sanctions on Russia (2014, 2022) and other geopolitical stress-events, BRICS countries began to intensify their efforts at reducing dependency on the dollar and Western payment rails.

• Over time, many BRICS members developed their own national payment systems (for example, India’s Unified Payments Interface (UPI), China’s Cross‑Border Interbank Payment System (CIPS), Russia’s System for Transfer of Financial Messages (SPFS) etc.). The BRICS Pay initiative attempts to integrate or interoperate across these systems. 

• In short, the idea: enable intra-BRICS trade and finance to settle in local currencies and via a payment-system ecosystem that is less exposed to Western financial infrastructure and sanctions.

What exactly is BRICS Pay?

While details are still evolving, key features of BRICS Pay include:

• A cross-border payment framework that allows member countries (and possibly their trading partners) to settle trade in local currencies rather than always via USD or euro.

• Interoperability between national payment systems of the BRICS countries — meaning the infrastructure of each country’s domestic system (UPI, CIPS, SPFS, etc) is envisaged to connect.

• A decentralized or distributed architecture (in some descriptions) for messaging and settlement, with encryption, high throughput (e.g., up to tens of thousands of messages per second mentioned) and resilience.

• It is not simply a common currency (at least not yet) — there is no unified “BRICS currency” officially live. The focus is currently more on settlement infrastructure, local-currency trade and alternative payment rails. 

• It may function as a parallel payment-system to existing global rails (SWIFT) rather than fully replacing them. 

Strategic Motivations

From India’s / a company-law / trade viewpoint, some of the motivations are particularly relevant:

• Financial sovereignty: Reducing exposure to external sanctions, restrictions, correspondent-bank dependencies strengthens national control over payments.

• Lowering transaction costs / faster settlement: If trade is settled in local currencies and via more efficient rails, companies may benefit from reduced FX conversions, lower banking fees, faster settlement. Study IQ Education+1

• Promoting local-currency trade: Encourages companies in BRICS countries to invoice, settle and trade in their local currency (or partner country’s currency) rather than automatically defaulting to USD. This is of significance for Indian exporters, importers

• Geopolitical repositioning: For governments and companies, aligning with such infrastructure can unlock new trade corridors / finance flows, especially in the Global South.

• Technology & inclusion: For SMEs, fintechs, the possibility of streamlined cross-border payments holds promise. BRICS Pay also emphasizes financial-inclusion and new rails.

Challenges & Risks

However, there are significant hurdles, which companies, lawyers, and tax/compliance professionals must note:

• Technical interoperability: Integrating very different domestic systems, varying regulatory regimes, encryption/standards is complex.

• Currency-convertibility and settlement risk: Local currencies often have restrictions (capital controls), less liquidity, and companies may face FX-risk if invoicing in local currencies.

• Regulatory / compliance issues: AML/KYC, sanction-risk, regulatory oversight will be critical. For Indian companies, compliance under foreign exchange law, prudential norms will matter.

• Trust & governance: Some BRICS members may worry about dominance of one country (e.g., China) or control of infrastructure. Aligning interests of diverse economies is difficult.

• Dollar dominance & entrenched networks: The USD and existing global rails like SWIFT are very deep and liquid. Dislodging them fully (or even partially) is difficult.

• Legal/tax/contract implications for businesses: If trade is in local currencies under new rails, contracts may need revision, tax/transfer pricing issues may emerge (e.g., foreign exchange gains/losses, documentation, bilateral trade treaties).

Implications for India & Indian Companies

Given your focus on company law, GST, income tax, compliance, here are specific angles for India and Indian companies:

• Indian exporters/importers with BRICS-country partners (China, Russia, Brazil, South Africa, plus newer members) may increasingly get settlement offers via BRICS Pay or local-currency corridors. Companies must evaluate FX margin, hedging, counter-party risk.

• From an income-tax / GST viewpoint: When trade is settled in local currency rather than USD, the invoice currency, value conversion, and documentation will need careful attention (transfer pricing, foreign-exchange regulations under Reserve Bank of India (RBI) rules).

• For companies in India entering into payment partnerships or fintech collaborations with BRICS-Pay-enabled systems, legal considerations around cross-border data, payment-system licensing, regulatory compliance (RBI, FEMA, PSS Act) will matter.

• For legal-framework/trade-law: India may need to revisit MOUs or trade agreements with BRICS partners to include local-currency settlement terms, dispute-resolution, currency-risk clauses.

• For finance-law professionals: The changing infrastructure may impact correspondent banking, balance-sheet structure of banks, foreign-exchange liabilities, and risk management.

• For your audience (CS Executive students, companies): It’s a fresh area for teaching: how cross-border payments are evolving, what companies must do to adapt, compliance check-lists for local-currency trade, and draft clauses for contracts allowing BRICS-Pay settlement.

What Should Companies / Law Professionals Do Now?

1. Stay informed: Monitor development of BRICS Pay, pilot corridors, participating banks/fintechs.

2. Map exposure: Identify whether you trade with BRICS-countries, whether payment networks or currencies could shift.

3. Review contracts & clauses: Consider adding flexibility for local-currency settlement, payment-rail choice, FX risk sharing.

4. Assess compliance: Under FEMA (Foreign Exchange Management Act), RBI guidelines — if trade is in local currency, ensure conversion rules, documentation, forward contracts, etc.

5. Engage bankers/fintechs: Understand how your bank or payment service provider will integrate with BRICS-Pay rails; what fees, timelines, settlement currencies.

6. Educate stakeholders: Both internal finance teams and external legal/compliance teams should be ready for new rails.

7. Risk-management: Hedging foreign-exchange, evaluating counter-party risk, regulatory risk if a new system is still nascent.

8. Plan for tax/GST: Ensure when invoices are in non-USD currencies, you apply correct valuation for GST, customs, transfer pricing, and reflect in books appropriately.

Conclusion

BRICS Pay represents a potentially transformative shift in the architecture of global payments. While it is not yet fully matured or universally adopted, the signals are strong: the BRICS bloc intends to push for local-currency settlement and independent payment infrastructure. For Indian companies, legal/finance professionals, and your audience of CS Executives and business-entities, this is a timely topic — one that intersects company law, tax/compliance, payment-rail innovation and international trade.

It may not immediately replace the dollar or SWIFT overnight, but even incremental adoption of BRICS Pay or local-currency settlement corridors will influence how contracts are drafted, how companies manage currency and payment operations, and how regulators respond.

If you like, I can draft a ready-to-publish article (1500-2000 words) on this topic tailored for Indian companies, with headings, legal references (FEMA, RBI, trade law), compliance checklist and implications for CS professionals — would that suit you?