Swift conducts 13-second cross-border payment

Swift says it has managed to complete an international payment in just 13 seconds, in what it claimed was a “major advance” for cross-border transactions.

The service is some way away from being rolled out to Swift customers, but Harry Newman, head of banking at Swift, said the organisation would be working with the market infrastructures involved in the trials on “how to progress to live operation”.

Sending money to another country is typically slow and costly. Current methods can take several days, as payments may be held up by the need for manual anti-money laundering checks, or may arrive outside of settlement hours and have to wait to be processed.

The move to real-time retail payments coupled with many central banks starting to adopt round-the-clock settlement has opened the way to near-instant cross-border payments.

Swift’s trial used its own “gpi” system with national real-time payments infrastructure to achieve much faster global payments. In the tests, payments went from origination through an intermediary and into the customer’s account in seconds, including clearing, settlement and compliance checks.

A trial based on Singapore’s Fast system achieved a cross-border payment in 13 seconds, while Australia’s New Payments Platform (NPP) was able to deliver a payment between Australia and China in 18 seconds. A trial using the ECB’s Target Instant Payment Settlement achieved a payment from Singapore to a beneficiary’s account in Germany in 41 seconds.

Luke Perkins, who was involved with the trial at ANZ Bank, told the Sibos conference on September 23 that the Australian trial had achieved an average speed of 51 seconds, with all payments settled within a minute.

He said there was more work needed in areas such as how to operate a service round the clock, and how to balance compliance against customer experience. He said Australia’s NPP would be compatible with instant cross-border payments by the end of 2019, and banks would begin work on testing in 2020.

Ignacio Terol, deputy head of the European Central Bank’s market infrastructure development division, said the trials showed it was possible to achieve “24/7/365” availability of central bank money even across borders.

“During the trial, the processing time in Tips was as low as 60 milliseconds,” he said. “We look forward to working with Swift and the Tips participants on the next steps in this initiative.”

Swift said the new service would be available to “all types” of banks’ end-customers, from multinational companies to retail payment platforms. It said the system would combine high speeds, transparency on fees and predictability on when a beneficiary’s account will be credited.

The emergence of stablecoins such as Facebook’s libra has raised the urgency of achieving fast, cross-border payments. Banque de France governor François Villeroy de Galhau recently called on regulators to do more to encourage better payment methods as an alternative to stablecoins.

Many regulators have expressed concern over whether stablecoins may fail to adhere to the same anti-money laundering standards required of traditional cross-border payments.