The U.S. rollout of EMV is just one chapter—albeit a major one—in an unfolding international payments story, but another one is taking the stage that could have important implications both for faster payments and cross-border transactions.
SWIFT, the Belgium-based international financial-messaging
organization, announced on Tuesday that 73 financial
institutions worldwide have now signed on for its so-called
global payments innovation initiative, up from 45 in
January. SWIFT announced the program in December as an
effort to speed up and streamline cross-border payments.
Such payments are widely seen as fraught with complexity but
are increasingly important as e-commerce volume grows.
Some 21 of these banks are also participating in a pilot
that grew out of the initiative and began in April to test
same-day funding, fee transparency, and end-to-end payments
tracking for cross-border business-to-business transactions.
SWIFT said Tuesday early results will be presented in
September at its annual Sibos conference in Geneva,
Switzerland, with wide availability coming early next year.
According to SWIFT, the financial institutions participating
in the pilot are ANZ, Bank of America Merrill Lynch, Bank of
China, Bank of New York Mellon, Bank of Tokyo-Mitsubishi
UFJ, Barclays, BNP Paribas, Citi, Danske Bank, DBS, ICBC,
ING Bank, Intesa Sanpaolo, JPMorgan Chase, Mizuho, Nordea,
Royal Bank of Canada, SMBC, Standard Chartered, UniCredit,
and Wells Fargo.
As an example of the kind of innovation the cross-border
initiative is aiming at, SWIFT is building a cloud-based
database of information that will allow banks—and senders—to
monitor payments from the time they are sent until they are
confirmed by receiving banks. SWIFT consciously compares the
service to the sort of tracking system routinely offered
online by Federal Express and other package-shipping
“This new payments tracker is a great example of
collaborative innovation,” said Wim Raymaekers, global head
of banking market at SWIFT and project lead for the
payments-innovation initiative, in a statement Tuesday. “For
the first time, banks will be able to give their customers
precise information about their payments, in real-time,
including confirmation of credit to beneficiary’s account.”
SWIFT has not commented on possible pricing for the new
payments initiative, but experts figure it's not likely to
be out of line with pricing for automated clearing house
transactions. "What [the initiative] does is effectively
create a global ACH-like experience, notes Gareth Lodge, a
senior analyst at financial-services consultancy Celent, in
an email message. "Whilst prices are not public, ACH
transactions are usually extremely low in cost."
The 73 banks that have joined the initiative so far account
for almost three quarters of all cross-border payments on
the SWIFT network. Raymaekers said. Founded in 1973, SWIFT
now embraces more than 11,000 financial institutions and
corporate entities globally, handling payments, securities,
and treasury data.
What the initiative may do for these banks, and any that may
join in the project later, is to make them more competitive
for cross-border payments at a time when newer, more
technologically oriented firms are entering the market.
"SWIFT [has] done this more to stave off competition from
new players who have built new platforms from scratch to
address the low value cross-border market." says Lodge. "New
entrants to the market have created platforms that utilize
modern technology, meaning that the running costs are
significantly cheaper." Examples of such new firms, he says,
include London-based Earthport, New York City-based Transpay,
and Edison, N.J.-based Paycommerce
For now, at least, SWIFT officials aren’t bashful about the
initiative and its potential impact on cross-border
payments. The “global payment innovation initiative is a
real game-changer,” said Christian Sarafidis, chief
marketing officer at SWIFT, in a statement. “The large
number of banks, the new payments tracker, a pilot showing
results, and a roadmap to deliver even more value—this
initiative is the ‘new standard’ for any bank with