Related News

UK firms pursue supply chain transparency amid regulatory pressures: Santander

Santander appoints Rico as global trade and working capital head

ECAs throw support behind steel giant’s decarbonisation push

Swift says CBDC testing for trade payments showing positive results

ECAs and banks forge US$2.5bn deal for Chile copper mine

Swift has launched a pilot of real-time gpi cross-border payments in Europe through the Eurosystem’s Target instant payment settlement (Tips).

Swift went live on Tips last year, with a client of Spain’s CaixaBank using the system to make an instant, intra-European payment through Sepa to a client of French bank, Natixis. In this latest pilot, banks from France, Germany, Italy, Luxembourg, Russia and Spain, which Swift says include Banque Internationale à Luxembourg, BBVA, Deutsche Bank, Natixis, Santander, Sberbank and UniCredit, will go one step further, using the rails of the Tips system to settle cross-border payments made into Europe via gpi.

Launched in 2017, Swift gpi has increased the speed, transparency and tracking of cross-border payments through the Swift network. On average, 40% of gpi payments are credited to end beneficiaries within five minutes. However, delays come about when the final leg of the transaction needs to be cleared within the recipient country, due in part to local clearing systems’ limited operating hours.

Connecting gpi to regional and domestic instant settlement systems is Swift’s way of getting around this. “What we’re planning to do here is to take a gpi payment cross-border into Europe and then clear it through Tips,” explains Wim Raymaekers, global head of banking market and gpi programme director at Swift, who adds that the test transactions will be carried out in the second half of August or beginning of September. “This will be test traffic, where the participating banks select a number of test messages that will be sent in euro or be converted to euro by the intermediary bank, to test the functionality and the capability of sending these payments into Europe. The idea is to prove the concept, and for that we will take a number of significantly relevant messages to prove that we can take a payment cross-border into Europe and clear it through our banks, through their systems, all the way to the last leg where there is then a payment confirmation.”

Other industry players – chiefly Swift’s blockchain-based competitors – have criticised gpi’s speed and efficiency. However, Raymaekers tells GTR that the gpi-Tips combination means payments can be cleared end-to-end in “under 60 seconds”.

This European pilot follows a successful trial in Australia last year, which saw gpi combined with that country’s national payments platform (NPP). It demonstrated that by enabling gpi in real-time domestic systems, cross-border payments can be effected almost instantly, even when they involve domestic settlement and non-gpi banks. The results of the test provided the impetus for discussions between Swift and regulators around the world to connect even more payment corridors to the gpi system.

“We are seeing a lot of excitement in Asia,” says Raymaekers, adding that at last week’s regional workshop in Beijing, the payment network achieved a successful trial of a payment into Singapore using the city-state’s fast and secure transfers (Fast) system.

Rolling out truly instant last-mile payments using Swift gpi globally means getting each and every domestic instant settlement system on board. With three down – NPP, Fast and Tips – Swift still has some way to go to achieve worldwide coverage. “We see a very positive, dynamic dialogue happening from the regulatory point of view, because they also want to speed up transactions,” says Raymaekers, who adds that Swift is taking a “system by system” approach. “Some systems have a specific format. They may have specific processing rules. In some countries, it’s not yet allowed to take cross-border payments into the domestic instant payment system, so they need to update their rules. We are really taking it opportunity by opportunity, one at a time, enabling this last leg instant payment functionality.”

Swift will present the first results from this European pilot at Sibos, which will be held in London in the third week of September.