Swift is moving towards universal adoption of its global payments innovation (gpi) service for cross-border payments.
The move means that all 10,000 banks on its global network will use gpi, after Swift was impressed by the progress made with the technology since its launch in early-2017.
Already, more than US$100bn in Swift gpi messages are sent every day, accounting for 25% of cross-border traffic on the Swift network. Almost 50% of gpi payments are executed in under 30 minutes, while almost all are completed within 24 hours. Given the usual days-long lag in international trade payments, this has been welcomed by the industry.
The service is already being used by 49 of the world’s top 50 banks. To assist its rollout among smaller banks, which account for a small portion of global payments, Swift will be introducing and supporting a “basic gpi”. This will not cost any extra to implement.
The aim is to have all 10,000 banks using gpi by 2020, Wim Raymaekers, global head of banking market at Swift, tells GTR.
“It will be mandatory, either in full, or through the basic gpi service. All banks will have to follow the basic rules and we will be building specific programmes to help them make that as easy as possible. What this means is that all banks’ payments will be sent through gpi with same day end-to-end delivery and full tracking and transparency as far as the beneficiary bank, if they are on Swift,” he says.
Raymaekers claims that the additional cost of moving to gpi “are very low, especially compared to switching to other systems”. Customers will have to make some changes to their back office to use the technology, mainly around providing greater data in their messaging.
However, he says the rollout of gpi does not necessarily spell the end of Swift’s work on blockchain.
“We are still experimenting with blockchain, but as others have acknowledged, it isn’t ready for wholesale payments, much less in the cross-border area. We will continue to look at and develop technologies that could help improve the cross-border payments experience even further – using APIs for instance,” he says.
Last year, Swift conducted a proof of concept with blockchain technology and said the results were encouraging, but that there was not enough maturity to deploy it on a global scale.
Swift has come under pressure in recent years from fintech startups, often those using blockchain, moving into the payments space. Blockchain consortium R3 worked with the Monetary Authority of Singapore (MAS) and a range of banks and IT providers to trial instant payments, in a pilot called Project Ubin, in 2017. The organisations involved were Bank of America Merrill Lynch, Credit Suisse, DBS, HSBC, JP Morgan, MUFG Bank, OCBC Bank, Singapore Exchange, United Overseas Bank and BCS Information Systems.
Earlier this week, GTR reported that blockchain-based payments rival Ripple has dismissed Swift’s gpi as being “just a marginal improvement” on “very old architecture”. Ripple has made repeated swipes at Swift, the established power in international trade payments, in recent years.
In 2017, Ripple was accused of aggressively hijacking the Sibos event in Toronto, with one media describing Swell as a “Sibos-killer”. A fleet of Ripple-branded cars were parked outside the Sibos venue throughout the week, ready to ferry people back and forth between the two events.
Swift has generally not commented on competitor activity, preferring instead to focus on the merits of its own technology.
“Nearly 50% of gpi payments are completed and credited to end beneficiaries’ accounts in less than 30 minutes, but many are taking place in seconds. This enables banks to deliver a much enhanced service to their customers. To date, 35 million gpi payments have been processed, and hundreds of thousands of payments are being sent daily across 450 country corridors, in more than 100 currencies. In major corridors, such as USA-China, gpi already accounts for nearly 50% of payment traffic,” Raymaekers says on Swift’s plans to rollout gpi.