SWIFT and the Banking Commission of the International Chamber of Commerce (ICC) have released new legal and technology standards for bank payment obligation (BPO), which aim to help banks transform their supply chain finance (SCF) services.

The BPO is a new payment term that allows buyers and suppliers to secure and finance international trade transactions. It provides the benefits of a letter of credit (LoC) in an automated and secured environment, and enables banks to offer flexible risk mitigation and enhanced financing services to their corporate customers.

The new release, which will be implemented from July, offers a combination of legally-binding rules and electronic messaging (e-messaging) standards. The BPO rules will establish uniform practices for BPO market adoption. Together with the ISO 20022 messaging standards, these rules provide an industry wide foundation for banks to develop risk and financing services aligned with today’s technology.

SWIFT has also issued a white paper, entitled ‘A New Start for Supply Chain Finance’, which reviews how industry standards and innovative technologies allow the trade industry to unlock the real potential of SCF. (Worth a read.)