Cross-Border Payments Pilots, Networks Take Aim At Supply Chains

To gain speed and transparency, cross border payments need new infrastructure.  Recent news show partnerships among banks, and in some cases, consortiums of FIs.  Some efforts target blockchain, too – all with the ultimate goal of boosting trade finance and supply chain finance efficiencies.  

Cross-border payments — and buildouts of the networks to facilitate those payments — are gathering headlines across company partnerships and consortium.

To that end, earlier this month, Alfa-Bank and Novolipetsk Steel Company said that they are working to pilot cross-border payments between Germany and Russia and are also working in cooperation with Commerzbank and Vesuvius GmbH. The payments are being piloted across R3’s Marco Polo Network.

Alfa is the largest financial institution in Russia, as reported by Cointelegraph, as measured by asset base.

Cointelegraph reported that the pilot’s purpose is to build a digital trade finance and supply chain finance solution. In a statement, the head of trade finance at Alfa-Bank, Dina Merkulova, said, “Projects such as Marco Polo create added value for clients ensuring more international trade transparency and manageability thanks to integrated bank payment, finance and discount instruments.”

In previous news, Bank of America joined R3’s Marco Polo Network, also with the goal to improve trade finance.

Separately, and also in Europe, six Nordic banks have stated that they are supporting and helping to fund the development of real-time payments functionality cross border through the P27 collective.

The banks, according to a release, include (alphabetically) Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank. The banks have reportedly signed a shareholders’ agreement. The undisclosed financial commitment will cover costs until P27 is financially sustainable, and the payments platform is slated to launch in 2021.

Lars Sjögren, CEO of P27 Nordic Payments Platform AB, said, “P27 will become the world’s first integrated domestic and cross border real-time payments platform. The Nordic banking sector already has a leading position in Europe, and P27 will help further expand and consolidate this position. Today’s decision from all of our owners demonstrates their commitment, belief and support.”

P27 already has an agreement in place with Mastercard to operate the payments platform. Next steps include obtaining clearing licenses and merger filing approvals.

In recent news surrounding SWIFT, Fibank (First Investment Bank) said it has joined SWIFT gpi, which has been focused on international payments. Beginning last month, the bank had started sending cross-border payments through the platform. SWIFT said 36 percent of the gpi transfers are credited to the beneficiary’s account within five minutes, 53 percent within an hour and 96 percent within the same day. The roster of FIs participating in SWIFT gpi includes 660 banks.

In news a bit closer to home, Citi said last week it has partnered with foreign exchange management firm Kantox to enhance its FX services for corporate clients. Through the partnership, according to Kantox, the company will provide its FX management and business payment solutions to Citi Commercial Bank’s international businesses based in the U.S.

The offering is part of Citi’s existing Dynamic Management Foreign Exchange initiative, the companies said. They added in a release that that the software is currently in pilot phase with select Citi commercial clients. The companies expect to announce a wider rollout of the service next year.

“As our clients’ treasury needs continue to rapidly evolve, Citi is always looking to develop client-focused solutions that are thoughtful and forward-thinking to deliver on what clients crave in their day-to-day operations,” said Kyle Falconi, head of U.S. Commercial FX and Derivative Sales at Citi. “We look forward to offering our clients a seamless, technology-based FX and payment solution with the support of the Kantox team.”

The press release said this may include the integration of Kantox’s Dynamic Hedging FX solution.