Cross-Border Same Day ACH Funding
SWIFT Attracts 73 Banks Worldwide for Cross-Border Payments Initiative As Pilot Unfolds
SWIFT, the Belgium-based international financial-messaging organization, announced on Tuesday that 73 financial institutions worldwide have now signed on for its so-called global payments innovation initiative, up from 45 in January. SWIFT announced the program in December as an effort to speed up and streamline cross-border payments. Such payments are widely seen as fraught with complexity but are increasingly important as e-commerce volume grows.
Some 21 of these banks are also participating in a pilot that grew out of the initiative and began in April to test same-day funding, fee transparency, and end-to-end payments tracking for cross-border business-to-business transactions. SWIFT said Tuesday early results will be presented in September at its annual Sibos conference in Geneva, Switzerland, with wide availability coming early next year.
According to SWIFT, the financial institutions participating in the pilot are ANZ, Bank of America Merrill Lynch, Bank of China, Bank of New York Mellon, Bank of Tokyo-Mitsubishi UFJ, Barclays, BNP Paribas, Citi, Danske Bank, DBS, ICBC, ING Bank, Intesa Sanpaolo, JPMorgan Chase, Mizuho, Nordea, Royal Bank of Canada, SMBC, Standard Chartered, UniCredit, and Wells Fargo.
As an example of the kind of innovation the cross-border initiative is aiming at, SWIFT is building a cloud-based database of information that will allow banks—and senders—to monitor payments from the time they are sent until they are confirmed by receiving banks. SWIFT consciously compares the service to the sort of tracking system routinely offered online by Federal Express and other package-shipping services.
“This new payments tracker is a great example of collaborative innovation,” said Wim Raymaekers, global head of banking market at SWIFT and project lead for the payments-innovation initiative, in a statement Tuesday. “For the first time, banks will be able to give their customers precise information about their payments, in real-time, including confirmation of credit to beneficiary’s account.”
SWIFT has not commented on possible pricing for the new payments initiative, but experts figure it's not likely to be out of line with pricing for automated clearing house transactions. "What [the initiative] does is effectively create a global ACH-like experience, notes Gareth Lodge, a senior analyst at financial-services consultancy Celent, in an email message. "Whilst prices are not public, ACH transactions are usually extremely low in cost."
The 73 banks that have joined the initiative so far account for almost three quarters of all cross-border payments on the SWIFT network. Raymaekers said. Founded in 1973, SWIFT now embraces more than 11,000 financial institutions and corporate entities globally, handling payments, securities, and treasury data.
What the initiative may do for these banks, and any that may join in the project later, is to make them more competitive for cross-border payments at a time when newer, more technologically oriented firms are entering the market. "SWIFT [has] done this more to stave off competition from new players who have built new platforms from scratch to address the low value cross-border market." says Lodge. "New entrants to the market have created platforms that utilize modern technology, meaning that the running costs are significantly cheaper." Examples of such new firms, he says, include London-based Earthport, New York City-based Transpay, and Edison, N.J.-based Paycommerce.
For now, at least, SWIFT officials aren’t bashful about the initiative and its potential impact on cross-border payments. The “global payment innovation initiative is a real game-changer,” said Christian Sarafidis, chief marketing officer at SWIFT, in a statement. “The large number of banks, the new payments tracker, a pilot showing results, and a roadmap to deliver even more value—this initiative is the ‘new standard’ for any bank with cross-border payments.”