SWIFT has announced a new service that is designed to help financial institutions improve the experience for small and medium-sized enterprises (SMEs) and consumers who send low value cross-border payments. The service aims to enable these bank customers to make faster, easier, predictable and competitively priced payments all around the world.

Utilising SWIFT gpi

SWIFT says it is working with over 20 banks to develop the service, which builds on SWIFT gpi and the high-speed rails that have already transformed the business of high-value payments. 

The aim of the initiative is to enable SMEs and consumers to benefit from predictable payments, with costs and processing times known upfront, and real-time status available to both originator and beneficiary customers via their financial institutions. 

The next step of a new strategy

The low value payments service is another part of SWIFT's new strategy, announced last month, to enable instant and frictionless transactions from one account to another, anywhere in the world. A key aspect of that strategy is helping financial institutions strengthen their position in the B2B space, whilst expanding their capabilities in fast growing segments such as SME and consumer payments.

In last month's announcement, the cooperative said it will expand beyond financial messaging to provide comprehensive transaction management services. This approach is designed to support and accelerate innovation, paving the way for financial institutions - independently or in collaboration with fintechs - to create new value-added services to support their business growth. In payments, financial institutions will be able to expand offerings to businesses and consumers and enhance the end-customer experience. In securities, financial institutions will benefit from improved reconciliation, reporting and asset servicing processes as well as end-to-end visibility of transactions to reduce settlement fails and fines. 

SWIFT’s enhanced platform will orchestrate interactions between financial institutions and other participants to minimise friction, optimise speed and provide end-to-end transparency and predictability from one account to another anywhere in the world. This move has the potential to power instant and frictionless transactions between 4 billion accounts serviced by financial institutions across the SWIFT network. The next-generation digital platform will use APIs and cloud technology to provide a set of common processing services that banks have historically invested in individually, saving the industry time and money. New and extensive data capabilities will enable the pre-validation of essential data, fraud detection, data analytics, transaction tracking and exception case management. 

Bringing efficiencies to low value cross-border payments

SWIFT says that the key pillars underpinning the low value cross-border service include:

• Easy to use: The service will have a simple and streamlined user experience with security ingrained at every level.
• Fast payments: Tighter service levels between banks will increase speed. A single payment format will increase straight through processing, while existing services such as pre-validation will remove frictions that cause delays.
• Competitive prices: Predictable and competitive processing fees are agreed bilaterally between financial institutions, enabling them to provide their end customers with upfront transparency on fees. 
• Secure: Payments will be exchanged through the secure SWIFT network and cleared through best-in-class channels for international payments.

“The success of SWIFT gpi, which is used by thousands of banks and carries billions of payments globally, enables ever-faster transaction processing times and transparency,” said David Watson, chief strategy officer at SWIFT. “And it now provides us with the opportunity to transform the experience in the SME and consumer payment markets. We expect that our new gpi initiative for low value cross-border payments will similarly have widespread adoption and help us deliver our vision of making payments brilliantly simple for everyone.”

Last week, the first payments through the new service were successfully exchanged between banks who are helping to develop it. These banks represent a global geographical spread and include: Bank of China, Barclays, BNP Paribas, BNY Mellon, Deutsche Bank, KEB Hana Bank, MYbank, National Australia Bank, SMBC, Standard Bank, StoneX, UniCredit and Wells Fargo. An additional seven banks have signed up to participate in a pilot phase starting at the end of October: Banca Intesa, BBVA, DNB, HSBC, Sberbank of Russia, Societe Generale and Standard Chartered. The service is expected to be available to all gpi financial institutions in 2021.

The bank view

"Barclays is excited to have been involved in the development of SWIFT’s initiative for low value cross-border payments, a truly collaborative effort across the industry that builds on the success of SWIFT gpi," said Lucy Hawley, head of CBFX and Multicurrency Payments at Barclays. "Customer needs and expectations are changing as the world is becoming increasingly digital and instant, and cross-border payments are no exception to this. Customers want to know upfront how much their beneficiary will receive and when they will be credited, while still feeling confident that their payment will be made seamlessly and securely, direct from their bank account.  This is exactly what we have achieved, a service for low value cross-border payments that is transparent, predictable, frictionless and simple so that customers can focus on running their business or securing their holiday, not how they pay for it.”

"Over the past three years, the banking community, together with SWIFT, has completely transformed the high-value cross-border payments landscape as a result of gpi," noted Marc Recker, global head of Clearing Products, Cash Management, Deutsche Bank. "With corporates now profiting from improved cost-transparency, speed of execution and predictability of their payments, the plausible next step is to enable SMEs and consumers to reap similar benefits for their lower value end-to-end cross-border payments”. 

"Leveraging the success of SWIFT gpi as a foundation to transform the cross border payment experience, SWIFT’s initiative for low value cross-border payments provides upfront predictability for retail and small to medium sized business payments in an open network with global reach," commented Joanne Strobel, head of Technical Solutions and Network Management for Wells Fargo’s CIB Global Payment Services. "Wells Fargo is pleased to be one of the first US banks to pilot this controlled and transparent payment solution and look forward to how it will transform and simplify the global payment experience.”

“Massive shifts in payments experience have been delivered via SWIFT gpi," concluded Shirish Wadivkar, global head, Correspondent Banking Products at Standard Chartered. "With this new initiative, we will drive the benefits of gpi even further. With simplicity as our goal, we aim to deliver a better experience than close-loop cross-border payments systems can through an open gpi ecosystem.”