In just three years since its launch, SWIFT’s global payments innovation (gpi) has been widely embraced by the financial community and is proving to be the new norm in cross-border payments. Payments are now typically made within minutes or even seconds, while banks are able to track their payment flows end-to-end and in real-time.
SWIFT gpi now has over 3,900 members and transferred nearly USD77 trillion cross-border payments in 2019. That’s almost double the $40 trillion that moved through the service in 2018. Not only this:
- by the end of last year, near two-thirds (65 per cent) of SWIFT’s cross-border payment transactions were sent using gpi
- the number of live gpi country corridors almost doubled to more than 1,900.
So what is next?
Extending global coverage
A vital part in extending the gpi coverage is to focus on:
- Supporting further adoption by banks with large payment flows
- Ensuring broad geographic coverage
SWIFT is well aware that moving to gpi requires some of their member banks to carry out system and procedural changes. Carlo Palmers, Head of Payments Solutions at SWIFT, said that: “Our intention is to help our members by leveraging the reach that the SWIFT network offers, providing them with convenient tools that ease the implementation of gpi and provide additional functionality to increase the value of gpi even more.”
Developing gpi instant payments
There are now over 40 instant payment systems worldwide of which most are focussed on domestic payments. Due to globalisation of trade and increasing cross-border transactions, they are being asked to cater for incoming/outgoing cross-border payments as well.
This will be particularly attractive for trade transactions as instant payment systems, which typically operate 24/7, remove the need for processing cut-off times. BUT, and it is a big BUT, these payments need to be identified in these systems as international cross-border payments. SWIFT is enabling this global instant service whilst ensuring high levels of security, anti-fraud measures are available and that customers have full transparency.
SWIFT is currently working on two gpi instant international payment use cases:
- Instant international payment, between two gpi members (currently operational)
- Instant international payment, via gpi members into domestic instant payment system (in trial and testing)
SWIFT has designed the gpi instant service to be complementary to the gpi customer credit transfer service where the processing time and windows are different. This facilitates the adoption and implementation by gpi members, who can decide to use the gpi instant payment service for their bilateral cross-border payments already today (use case 1).
The large scale of usage of gpi instant, use case 2, will depend on how soon the domestic instant payment systems can support the additional processing required for cross-border transactions. Successful trials have been held with Australia (NPP), Singapore (FAST) and Europe (TIPS) and conversations are in progress with many other countries, as announced at Sibos London in September 2019.
“The global introduction of SWIFT gpi Instant will allow banks to offer their customers tomorrow’s service, leveraging proven infrastructure”, said Palmers.
Extending gpi functionality
SWIFT is also driving the introduction of new functionalities on top of gpi, such as the Stop and Recall service, launched last year, which gives banks the ability to:
- stop a payment instantly, regardless of where it is in the payment chain, thanks to the unique tracking code linked to all SWIFT gpi transactions
- notify every bank in the payment chain at the same time.
Since the new service was launched early 2019, thousands of stop and recall requests have been initiated to stop a payment ‘in-flight’. The service helps prevent a number of issues, ranging from accidental errors in payment instructions to potential fraud.
The Stop and Recall service is a great example of what can be achieved with the new tracking service. Palmers believes that “SWIFT gpi provides a necessary foundation for many more services that current banks’ customers, from large to small, expect from them. We will continue to build on it in 2020 and beyond as we strive to make real-time, 24/7 cross-border payments as seamless, convenient, cost-efficient and accessible as domestic payments.”
CTMfile take: SWIFT gpi is the foundation stone of a whole new series of cross-border payment services. Cannot wait to see User Case 2 of gpi Instant in operation.
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