Most cross-border payments are processed without issue, but one of the leading causes for those that fail or lose time is incorrect beneficiary information - from misspelled names to transposed account numbers. As they are detected late in the process, these issues can be among the most time-consuming and costly to resolve. To address these issues, SWIFT has launched its Payment Pre-validation service, which enables banks to verify payee account details before an international payment is sent, removing a key point of friction in cross-border transactions.

Removing friction

The Payment Pre-validation service allows a sending bank to confirm account details, via an API, with the receiving bank from the very beginning of the process so that any data or account problems are identified up front. This check is similar to what already occurs in some domestic markets, but SWIFT says that its service will go much further - solving the issue for up to 11,000 institutions and 4 billion accounts across 200 countries.

"Pre-validation is an important step in helping corporates to make simpler, faster and more secure cross-border payments," said Thomas Halpin, global head of Payments Product Management at HSBC. "This feature will ensure customers can send payments in confidence, and the increased security brings benefits not just for customers but for the entire payments community."

Delivering on its strategy

Payment Pre-validation is a core building block in SWIFT's strategy to drive instant and frictionless transactions worldwide. "SWIFT’s strategy to enable fast and frictionless payments takes a major step forward with the launch of this service," commented Stephen Gilderdale, chief product officer at SWIFT. "Payment Pre-validation will bring end-to-end efficiency, enabling our customers to provide better, faster and new services to their own end clients."

"Wells Fargo is pleased to be an early participant in SWIFT’s pre-validation solution as we continually seek ways to improve the global payment services that we bring to our clients," added George Doolittle, head of Global Payment Service, Corporate and Investment Banking Group at Wells Fargo. "The transformative value of SWIFT’s Payment Pre-validation service is the decrease in friction, resultant cost efficiency and improved client experience of understanding and correcting format issues before they result in a repair or inquiry at the beneficiary’s bank or creditor’s agent which can bring great benefits to our industry. This service addresses a key challenge in the cross-border payment industry."

SWIFT says that it developed the service in close cooperation with financial institutions, and a number of major global banks have already signalled their commitment to the service. The cooperative plans to continue innovating the service and over the coming months will offer additional checks based on reference data, encompassing millions of transactions to further predict, at the point of initiation, when a transaction may run into friction points along its journey.

Over the next two years and beyond, SWIFT has embarked on a journey to transform its platform to enable instant and frictionless payments anywhere in the world, aiming to significantly improve end-to-end efficiency, reduce total costs, and to create services that equip financial institutions to capture growth and create new, differentiated customer experiences. Payment Pre-validation is one of many such services to come that will support the first platform release in November 2022.