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SWIFT International Payments on Road to Real-Time at Low Cost

By Frances Coppola

The international messaging service SWIFT has released plans to make international payments “real-time, 24/7, and as seamless, convenient, cost-efficient and accessible as domestic payments.”1 If SWIFT can live up to the promise in that statement, it would mean an important leap forward for transforming international payments into a frictionless, ubiquitous global service.

For international businesses, real-time international payments available 24/7, 365 days of the year, could be a real boon. SWIFT says it aims to deliver this by 2021.2 However, SWIFT’s plans depend crucially on the ability of banks to transform their own IT systems and adopt open standards. And SWIFT faces competition from the growing cryptocurrency ecosystem, and from blockchain-based financial services providers.


Real-Time Payment Services Grow Domestically and Internationally


SWIFT counts among its members (and owners, since SWIFT is a cooperative) most of the world’s major commercial banks—the principal gateways for international payments. SWIFT says that seismic shifts already underway in domestic payments services are already forcing its members to move to real-time processing.3 The U.K. has had real-time settlement, which it calls “faster payments,” since 2008, but now the rest of Europe and the U.S. are catching up.


In November 2018, the EU rolled out its “Target Instant Payment Settlement” system (TIPS), enabling people and firms in 24 European countries to make instantaneous euro payments to each other 24/7, 365 days of the year.4 And in the U.S., The Clearing House (TCH) is gradually rolling out instantaneous 24/7/365 payments to individuals and companies.5


International payment services have hitherto lagged in this race toward ubiquitous real-time payments. But competition from disruptive technologies such as cryptocurrencies is now driving developments in cross-border payments, too.


SWIFT’s proposal is the latest in a series of moves by banks and payment services providers to improve the speed and efficiency of international payments. For example, many banks are partnering with fintech companies to improve payment services for business and retail customers.6 Some big banks are even introducing their own cryptocurrencies.7 And SWIFT itself has already rolled out a significant enhancement to its 40-year-old international messaging service, the “Global Payments Initiative” (GPI).8 This will become the heart of its new core architecture.


SWIFT’s GPI May Be The “Standard” For International Payments


GPI made three key changes to SWIFT’s messaging protocol. It:


  • Introduced a unique 36-digit transaction identifier for every payment (“Unique End-to-end Transaction Reference,” or UETR).
  • Implemented software that, using the UETR, tracks and reports the progress of payments from sender, through correspondents, to ultimate recipients.
  • Established a new cross-border convention under which banks commit to processing payments from start to finish within tight timeframes—timeframes that the tracking software makes visible to customers and correspondents.9

Only two years since its release, SWIFT’s GPI is already used for over 55 percent of international payments. SWIFT states that by 2020, GPI will be the standard for all cross-border payments. And it says that as banks upgrade their systems to real-time, and customers demand faster payments and 24/7/365 availability, a real-time international payments network based on GPI will emerge.10


Common Standards Needed for a Truly International Real-Time Payments System


Typically, new entrants to the international payments world offer self-contained systems such as cryptocurrencies as an alternative to existing payment services. But SWIFT rejects this as a solution. “Importantly, we don’t think that cross-border payments challenges should be solved for with closed loop systems,” it says, warning that multiple competing networks actually create barriers to international payments. “Value needs to move everywhere—from every account, to every account. Loops create barriers and friction; they reduce fungibility and portability, they limit competition and they fragment liquidity.”11


Instead of blockchain and cryptocurrency, SWIFT opts for something more mundane, but perhaps harder to achieve: a common standard for all international payments.


Lack of a common standard may be the biggest obstacle to seamless international payments. To solve this problem, SWIFT proposes to adopt the ISO 20022 open standard for payment messages.12 But creating a fully interoperable international payments architecture would require other international payment service providers to adopt the standard too. SWIFT enthuses about the benefits to banks, payment service providers and their customers of moving to the standard, saying that “it will enhance competition, drive innovation and reduce friction; it will benefit end-customers in terms of speed, ubiquity and choice; and it will deliver huge benefits to the industry in terms of Total Cost of Ownership reduction, ease of integration and efficient business processes.”13


Once ISO 20022 is fully adopted, APIs would enable banks, payment services providers and fintech companies to connect directly with the international payments network for each payment transaction, ending the need for data conversion, batching and associated costly delays.14


Can Blockchain-Based Businesses Use SWIFT for Payments?


Although it doesn’t plan to use blockchain or cryptocurrency itself, SWIFT is hoping to make its system compatible with blockchain-based trade platforms. It is currently doing a “proof of concept” test with the R3 trade platform. If this is successful, then it will make GPI generally available to blockchain-based trade platforms. This would enable blockchain-based businesses to integrate payments seamlessly with the banking system, eliminating the need to maintain transaction wallets on cryptocurrency exchanges.15



SWIFT’s initiative, together with other developments by fintech and payment services providers, promises to transform international payments to the benefit of international businesses and their customers. Businesses may soon see the arrival of instantaneous, unsleeping, ubiquitous, and low-cost global payments.

Frances Coppola - The Author

The Author

Frances Coppola

With 17 years experience in the financial industry, Frances is a highly regarded writer and speaker on banking, finance and economics. She writes regularly for the Financial Times, Forbes and a range of financial industry publications. Her writing has featured in The Economist, the New York Times and the Wall Street Journal. She is a frequent commentator on TV, radio and online news media including the BBC and RT TV.


1. “SWIFT publishes paper on the future of payments,” SWIFT;
2. “Payments: Looking to the Future – Instant, Accessible, Ubiquitous,” SWIFT;
3. Ibid.
4. “Target Instantaneous Payments Settlement,” European Commission;
5. “The Clearing House Gets Going With Real-Time Payments,” Forbes;
6. “The future of payments: fintech, banks and technology startups,” Tender Capital;
7. “Is JPM Coin A Serious Threat To Ripple?,” Forbes;
8. “The digital transformation of cross-border payments,” SWIFT;
9. “Payments: Looking to the Future – Instant, Accessible, Ubiquitous,” SWIFT;
10. Ibid.
11. Ibid.
12. “ISO 20022 payments messages,” ISO 20022;
13. “Payments: Looking to the Future – Instant, Accessible, Ubiquitous,” SWIFT;
14. Ibid.
15. Ibid.

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