While the world awaits the promise and wider use of blockchain and cryptocurrencies as solutions for faster cross-border payments, SWIFT gpi (for global payments innovation), just announced it’s narrowed the time for end-to-end payments down to minutes. The widely used global cooperative for financial messaging announced Wednesday that more than $100 billion US dollars in SWIFT gpi messages “are being sent every day, enabling payments to be credited to end beneficiaries within minutes – many within seconds.”
Companies, banks and central banks have been looking to increase the velocity of cross-border payments over the past several years, looking to do away with the lack of speed and efficiency and at the same time reduce the inherent risk exposure and logistical complexities. Currently cross-border payments can take days or even weeks, involve half a dozen or more middlemen and often offers no transparency. Cross-border payments can also be larded with regulatory compliance issues as well. This has become such an issue that the US Federal Reserve even created a Faster Payments Task Force to study the issue.
SWIFT now claims that it has moved the needle in the faster payments direction. “Overall, nearly 50% of SWIFT gpi payments are credited to end beneficiaries within 30 minutes,” SWIFT said in a statement. “And almost 100% of payments within 24 hours.” The slower ones, it said, take longer because they “typically involve more complex foreign exchange conversions, compliance checks or regulatory authorizations.”
SWIFT said its gpi program has been implemented by more than 150 financial institutions globally and that hundreds of thousands of payments or “nearly 10% of SWIFT’s cross-border payments traffic, are being sent daily across 220 international payment corridors.” One corridor, USA-China, “already account for more than 25% of the payment traffic.”
The faster payments arms race will definitely benefit most companies transacting globally. Currently Ripple, using an enterprise blockchain solution, says it’s also narrowed down that payment window to virtually instantaneous.