Instant cross-border SWIFT GPI Payments Test a Success

SWIFT announces successful test results of its new instant cross-border payments proof of concept, involving banks in China, Singapore, Thailand and Australia. SWIFT announces successful test results of its new instant cross-border payments proof of concept, involving banks in China, Singapore, Thailand and Australia.

The trial successfully demonstrated that by enabling GPI in real-time domestic systems, payments can be effected almost instantly, even when they involve domestic settlement and non-GPI banks.
Since going live in 2017, SWIFT GPI has removed many of the common frictions experienced in cross-border payments. 50% of GPI payments are now being credited to end-beneficiary accounts within 30 minutes and many of those within seconds. The fastest payment in these corridors was initiated from a GPI bank in Singapore and credited to a bank account at an Australian GPI bank within nine seconds. In effect, this is already a live real-time cross-border payment.

However, when there are multiple banks involved in the payment chain, and the final leg needs to be cleared within the recipient country, the domestic payments are sometimes delayed owing to the limited operating hours of the local clearing systems.

With the advent of real-time payments systems, which typically operate 24/7, there is an opportunity to remove these frictions and ensure that many of these payments can be credited in seconds rather than hours.

The debut of Australia’s domestic instant payment system, the New Payments Platform (NPP), enabled SWIFT and a group of banks from Australia, China, Singapore and Thailand*, to study the feasibility of enabling the GPS service in NPP and review how this would enable these cross-border payments to be sped up.

What the trial sought to establish was whether, by integrating and enabling the service into a domestic instant payment system, the GPI experience could be extended deeper into domestic markets, to end beneficiaries’ accounts, even outside normal business hours.

This trial has indeed confirmed that the SWIFT GPI “payments in seconds” experience can be extended seamlessly via domestic real-time payment systems to all NPP enabled bank accounts.

Key highlights from the trial:

• Twelve participating banks participated in this trial, with nine banks sending cross-border SWIFT GPI payments to Australia, and three banks in Australia processing the payments domestically via NPP.

• The trial covered three country corridors, namely China-Australia, Singapore-Australia and Thailand-Australia.

• Most real-world requirements were simulated in the test to ensure comprehensiveness, including screening, payment validations, liquidity management, message transformation and real-time status updates to the SWIFT GPI tracker.

• The extension of operating hours was validated with incoming payments processed both during and outside business hours in Australia.

• The fastest SWIFT GPI payment in the trial was sent from China, reaching the end beneficiary account in Australia via NPP in 18 seconds.

• The fastest test payments from Singapore and Thailand were similarly credited to Australian end beneficiaries via NPP within 30 seconds.

• All the payments sent during the trial were processed end-to-end within 60 seconds.

Mr. Eddie Haddad, Managing Director of SWIFT, Asia Pacific, said: “These results demonstrate two important prerequisites necessary to realise an instant cross-border payment service in the region. First, we are able to extend the window for processing cross-border payments outside traditional business hours. Second, by linking cross-border SWIFT GPI payments with domestic real-time payment systems, we are able to achieve faster cross-border payments amongst a larger number of institutions. The linkage was achieved by participant banks like National Australia Bank processing incoming SWIFT GPI payments onward as NPP instant payments.” Mr Haddad added: “There are a number of tangible advantages to this. We are looking at introducing considerably higher SME trade settlement efficiencies in important corridors like China-Australia, and enabling fully scalable connectivity to help drive ASEAN integration. Since its inception, SWIFT GPI has been adopted by 21 banks across the ASEAN region, and this number is set to grow. The new service will also facilitate anytime-anywhere peer-to-peer payments in areas such as mobile-to-mobile payments, loan repayments, and student tuition payments. This is just the beginning.”

Mr. Paul Franklin, General Manager, Payments, National Australia Bank Limited, said: "NAB is proud to have taken a lead role in the recent SWIFT instant processing proof of concept for cross-border payments into NPP. We have demonstrated the ability for customers to have access to funds within seconds and dramatic decreases in end-to-end processing times. It has given us an opportunity to show that our 24/7 clearing capability through NPP can be used to process international payments to other banks outside traditional RTGS business hours, which offers the potential for much later cut-off times, which is especially useful for payments originated in Asian time-zones. The success of this pilot has come from the combined effort of the participating banks, and a mutual desire to deliver a better payment experience for customers.”

While this initial trial focussed on payments going into Australia through the NPP, findings from the trial are being used to finalise a new SWIFT GPI instant cross-border payments service, which is being designed to scale and integrate with other real-time payment systems across the world.

SWIFT is in discussions with multiple domestic real-time payment operators and regulators to discuss how those payment corridors could also be linked to GPI. The service will reuse existing SWIFT GPI infrastructure, adding incremental business rules to remove residual business frictions in the payments chain, thus avoiding the need for additional investment in new cross-border infrastructure.

Since its launch in January 2017, SWIFT GPI has been rapidly adopted by over 270 financial institutions, with more than USD100 billion in SWIFT GPI messages sent every day. Half of SWIFT GPI payments are credited to end beneficiaries in less than 30 minutes, many in seconds, and almost 100% of GPI payments are credited within 24 hours. Over 30% of all SWIFT customer payments are now sent on GPI. By the end of 2020, SWIFT will extend the benefits of its GPI service to all 10,000 banks on its global network.