A new API standard for the pre-authorization of funds is being rolled out by SWIFT, clearing a path for a revolution in financial services enabled by open banking, the company said in a press release on Thursday (Sept. 5).
API standards accelerate the introduction of new services. With this latest standard, a payer’s bank can designate funds in advance, assuring upcoming payments will clear.
“SWIFT is uniquely positioned to tackle the problem of fragmentation in standards globally, and we are pleased to expand our current role to include the global standardization of open banking APIs,” said Stephen Lindsay, head of standards at SWIFT. “Our work on the pre-authorization of funds API is another example of the central part we are playing in ensuring the industry can make the most of the new open banking landscape.”
SWIFT’s Open Banking Extensions API standards is the second introduction to a universal suite of APIs the company is creating in partnership with FinTechs, banks and merchants. Earlier this year, SWIFT rolled out its Pay Later API standard.
“In the Nordics we know the benefits of collaboration in the standards space. We have built the world-leading BankID service and the Swish payment method,” said Kirstine Nilsson, Swedbank’s head of business infrastructure, consumer payments and cash management. “We are now collaborating on the P27 pan-Nordic clearing system. The banking industry must come together for the benefit of the digital economy to standardize retail and wholesale banking APIs.”
When individual banks use a unique API, merchants and FinTechs have to accommodate distinct security considerations and workflow for each one. This makes implementation more expensive and slows the process down. The new pre-authorization standard is now available for developers of APIs to adopt and use.
In July, SWIFT released its first set of guidelines for financial institutions using the ISO 20022 payments messaging standard to complete cross-border transactions. ISO 20022 has the potential to promote efficiency in the correspondent banking community and modernize cross-border transactions.