20 October 2018

SWIFT sees success with gpi instant cross-border payments trial

SWIFT successfully trials instant cross-border payments service using the New Payments Platform, together with banks in Australia, China, Thailand and Singapore.

SWIFT has released the results of its new instant cross-border payments proof of concept, which demonstrated that by enabling gpi in real-time domestic systems, payments can be effected almost instantly, even when they involve domestic settlement and non-gpi banks.

Since going live in 2017, SWIFT gpi has removed many of the common frictions experienced in cross-border payments. 50% of gpi payments are now being credited to end-beneficiary accounts within 30 minutes and many of those within seconds. The fastest payment made directly between gpi banks in these corridors was initiated from a gpi bank in Singapore and credited to a bank account at an Australian gpi bank within nine seconds. In effect, this is already a live real-time cross-border payment.

By enabling cross-border SWIFT gpi payments via gpi members, through domestic real-time payment systems, we are able to achieve faster cross-border payments amongst a larger number of institutions.

Mr. Eddie Haddad, Managing Director of SWIFT, Asia Pacific

However, when there are multiple banks involved in the payment chain, and the final leg needs to be cleared within the recipient country, the domestic payments are sometimes delayed owing to the limited operating hours of the local clearing systems.

With the advent of real-time payments systems, which typically operate 24/7, there is an opportunity to remove these frictions and ensure that many of these payments can be credited in seconds rather than hours.

Key highlights from the trial:

  • Twelve participating banks participated in this trial, with nine banks sending cross-border SWIFT gpi payments to Australia, and three banks in Australia processing the payments domestically via the New Payments Platform (NPP). 
  • The trial covered three country corridors, namely China-Australia, Singapore-Australia and Thailand-Australia. 
  • Most real-world requirements were simulated in the test to ensure comprehensiveness, including: screening, payment validations, liquidity management, message transformation and real-time status updates to the SWIFT gpi tracker.
  • The extension of operating hours was validated with incoming payments processed both during and outside business hours in Australia.
  • The fastest SWIFT gpi payment in the trial was sent from China, reaching the end beneficiary account in Australia via NPP in 18 seconds.
  • The fastest test payments from Singapore and Thailand were similarly credited to Australian end beneficiaries via NPP within 30 seconds.
  • All the payments sent during the trial were processed end-to-end within 60 seconds.

Mr. Eddie Haddad, Managing Director of SWIFT, Asia Pacific, said: “These results demonstrate two important prerequisites necessary to realise an instant cross-border payment service. First, we are able to extend the window for processing cross-border payments outside traditional business hours. Second, by enabling cross-border SWIFT gpi payments via gpi members, through domestic real-time payment systems, we are able to achieve faster cross-border payments amongst a larger number of institutions. The linkage was achieved by participant banks like National Australia Bank processing incoming SWIFT gpi payments onward as NPP instant payments.”

This initial trial focussed on payments going into Australia through gpi banks into NPP, however findings from the trial are now being used to finalise a new SWIFT gpi instant cross-border payments service, designed to scale and integrate with other real-time payment systems across the world. SWIFT is in discussions, together with banks, with multiple domestic real-time payment operators and regulators to discuss how those payment corridors could also be enabled with gpi. The service will reuse existing SWIFT gpi infrastructure, adding incremental business rules to remove residual business frictions in the payments chain, thus avoiding the need for additional investment in new cross-border infrastructure.

 

*The banks participating in the instant cross-border payments trial are National Australia Bank, Australia and New Zealand Home Group, Bangkok Bank, Bank of China, China Construction Bank, Commonwealth Bank, DBS Bank, Industrial and Commercial Bank of China, KASIKORNBANK, Siam Commercial Bank, Standard Chartered Bank and United Overseas Bank.

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