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Instant cross-border SWIFT gpi payments test worked

SWIFT have announced the successful test results of its new instant cross-border payments proof of concept, involving banks in China, Singapore, Thailand and Australia. SWIFT claim that. “The trial successfully demonstrated that by integrating gpi with real-time domestic systems, payments can be effected almost instantly, even when they involve domestic settlement and non-gpi banks.”

GPI real-time payments trial

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. 

Local real-time systems needed

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.

The trial

The debut of Australia’s domestic instant payment system, the New Payments Platform (NPP), enabled SWIFT and a group of banks from Australia, China, Singapore and Thailand*, to study the feasibility of enabling the gpi service in NPP and to review how this would enable these cross-border payments to be sped up.

What the trial sought to establish was whether, by integrating and enabling the service via gpi members into a domestic instant payment system, the gpi experience could be extended deeper into domestic markets, to end beneficiaries’ accounts, even outside normal business hours.

The trial involved:

  • twelve banks participated in the trial, with nine banks sending cross-border SWIFT gpi payments to Australia, and three banks in Australia processing the payments domestically via NPP 
  • 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 trial showed that:
  • 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
  • SWIFT gpi “payments in seconds” experience can be extended seamlessly via domestic real-time payment systems to all NPP enabled bank accounts.

Long term development

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.

Over 30% of all SWIFT customer payments are now sent on gpi. By the end of 2020, SWIFT will extend its gpi service to all 10,000 banks on its global network.

CTMfile take: Real-time liquidity management is becoming essential in the corporate treasury department. 

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