SWIFT’s Headway on Faster Cross-Border Payments Is Just the Beginning

One overarching theme in payments — no matter whether commercial or retail transactions — is that of speed.  

Faster payments tend to translate into greater efficiency and transparency, and there are any number of initiatives in the mix to improve cross-border transactions.

Real-time payments, of course, are just one option. The recent introduction of FedNow Service here in the U.S. brings yet another payments rail into the equation. But as instant payments schemes proliferate across the globe, interoperability is essential for payments to make their way across time zones and currencies.

In the meantime, SWIFT, the global messaging platform, said this week that it has exceeded some targets in making cross-border payments faster.

The platform said in a Tuesday (Aug. 22) news release that 89% of the cross-border payments made via its service are being processed within an hour.

SWIFT’s performance outstrips the G20’s Financial Stability Board’s goal, which aimed for 75% of international transactions to go through in an hour by 2027. 

We note that the SWIFT’s connectivity extends across more than 20 countries, spanning 11,500 FIs. 

And, with a bit of granularity into the critical mass that’s in place to embrace those faster settlements, as reported here late last year, the service said that SWIFT Go, “which brings speed, transparency, and certainty” to payments of less than $10,000, was being used by more than 500 banks in upwards of 120 countries.

SWIFT said at the time that nearly half of its transactions reach their beneficiaries within five minutes, while two-thirds wound up getting to their to their destination within an hour.

Global Participants

Last month, SWIFT, in collaboration with several banks, announced that it had successfully completed a pilot to process instant payments across currencies. Payments settlement firm Iberpay and Spanish banks including BBVA, Santander and CaixaBank led the testing with SWIFT, with payments originating from banks in Australia, Brazil and elsewhere.

The pilot anticipates the November 2023 launch of the new One-Leg-Out Instant Credit Transfer scheme of the European Payment Council, which would foster interoperability of credit transfers made in Euros. And in June, SWIFT said it was in the midst of testing existing infrastructure to transfer tokenized value over blockchain networks.  

The tests also involve the efforts of Web3 services platform Chainlink and more than a dozen financial institutions, with findings to be unveiled later this year. One of the goals of the public-and-private blockchain initiative is to solve the pain points presented by interoperability, and to reduce fragmentation.

As for the FIs themselves: PYMNTS data show that 64% of more than 300 FI executives surveyed said they are “very” or “extremely” willing to bring in new tech to solve cross-border pain points. The percentage increases for FIs serving cross-border payments needs of larger enterprises, as 88% as say they are “very” or “extremely” willing to adopt new technologies to facilitate B2B payments.