Cross-border payments were radically overhauled by global payments provider Swift last year with the launch of its global payments innovation (GPI) service. The new infrastructure not only decreases the time in which cross‑border payments are settled, but also enables real‑time end‑to‑end tracking, reducing opacity around these types of transfers.
The service is now used by 49 of the world’s top 50 banks and, by 2020, Swift aims to have all of its 11,500 bank customers using its GPI service for cross‑border payments. The functionality and success of the new system is why Swift has been awarded Best Payments and Settlement Technology Provider in the Central Banking FinTech & RegTech Global Awards 2018.
Impetus to upgrade the international payment system originated with customer demand. Cross‑border networks, which were last upgraded in the 1990s, seemed ancient in comparison to their retail counterparts, where technological advancement had fostered no end of innovation. Cross‑border payments remain slow because of intermediary banks, costly because of uncertainty around fees and opaque because of inconsistencies around confirmation messaging.
Swift GPI brings the advances seen in the retail space to cross‑border payments. Banks are able to use the service almost instantly because Swift has integrated its new technology with a mix of existing messaging standards and bank back-office processes. Integration takes between three and six months, and the system has been designed to be interoperable with cloud, application programming interface and blockchain platforms.
The primary target for GPI was initially corporate banks but, since the launch of the system in 2017, a number of retail banks have also signed up to use the service. Globally, around 190 banks now use the system, equating to around $100 billion worth of payments being conducted, 50% of which are completed in under 30 minutes. Previously, cross‑border payments would take around three to five days to complete. To date, 50 million payments have been processed in more than 100 currencies, with 40% of all payments made between the US and China conducted over the network.
In June this year, Swift’s board endorsed the move for universal GPI adoption by the end of 2020. This will ensure every bank with access to the Swift network is able to offer same‑day fully tracked payments. To ensure the transition to GPI is as smooth as possible, from November 2018 all payment messages on the Swift network will be required to include the unique GPI end‑to‑end transaction reference.
This enables GPI member banks to track their GPI payment instructions at all times, regardless of whether the other banks in the process are GPI members. By the end of 2020, confirmation funds that have been credited will be also be visible in the tracker for all payments on the Swift network.