Swift trials real-time cross border payments via Tips
by Graham Buck
Banks from France, Germany, Italy, Luxembourg, Russia and Spain are partnering with financial messaging network Swift to conduct real-time cross-border payments testing via the latter’s global payments innovation (gpi) initiative and the TARGET Instant Payment Settlement (Tips) platform of the Eurosystem
Institutions participating with Swift in the pilot include Banque Internationale à Luxembourg, BBVA, Deutsche Bank, Natixis, Santander, Sberbank and UniCredit.
The initiative, launched by the European Central Bank (ECB) and Swift, aims to extend the scope of instant cross-border payments in the European market by making the gpi service and the Tips system interoperable.
The banks will assume the cross-border component of payments, which will then be settled by the Tips platform, making it possible to instantly credit the accounts of the beneficiary banks across Europe.
While payment messages cross the Swift network in real-time, settlement and receipt of funds in the beneficiary account can lag by several days when entering national domestic clearing system.
With the advent of real-time, 24/7 payment systems and longer ‘credit windows’ enabled by the continuous availability of central bank money settlement, such as that offered by Tips, these frictions can be removed, ensuring that payments can be credited in seconds.
“By linking Swift gpi and Tips, our customers will be able to leverage their existing investments to deliver a superior service to their clients,” said Alain Raes, chief executive EMEA and Asia Pacific at Swift.
“The support we have from major European banks demonstrates their commitment to partnering with Swift to deliver a fast, secure and seamless cross-border real-time payment service that scales globally.”
Swift successfully tested a similar system in 2018 with Australia's New Payments Platform (NPP), and a group of Australian, Chinese, Singaporean and Thai banks. The trial demonstrated that by enabling the gpi service in national systems in real time, payments can be made almost instantly, even those involving a national settlement and banks outside the gpi system.
Swift is now working with its community to extend the scope of the initiative to other real-time systems around the world.
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