The payment infrastructure provider EBA CLEARING has collaborated with paytech SWIFT and The Clearing House (TCH) to launch a pilot service for immediate cross-border (IXB) payments.
Supported by banks from either side of the Atlantic, the pilot service is scheduled to begin by the end of this year with several participants joining the service in a phased approach.
Twenty-four financial institutions have had a hand in the design of the pilot service, with each participant expressing their interest in joining the pilot.
Its proof of concept was completed in October 2021 and reportedly demonstrated the ability to synchronise settlement in one instant payment system with settlement in the other and to convert real-time messages between both systems.
The pilot has been able to achieve this by utilising both sides’ fastest domestic payment options.
Since the conclusion of its pilot phase, the group has formed an IXB sounding board, which provides input on the development of the service whilst leveraging existing real-time infrastructure, technology and standards.
Based on the building blocks of ISO 20022 message standards, SWIFT Go and the instant payment systems of EBA CLEARING and TCH, the service will initially support instant payments in the US dollar and euro currency corridor.
As part of the announcement, the companies stated that the service is being developed with a view to extending to other currency channels and payment systems.
“The RT1 and RTP networks are perfectly positioned to deliver a better cross-border experience with a very short time to market,” said Russ Waterhouse, EVP for product development and strategy at TCH.
“The trans-Atlantic pilot service will provide valuable input for the development of a fully-fledged IXB service to meet customer expectations across the globe.”
“We are pleased that the IXB development benefits from the expert input of 24 banks from 10 countries,” added Erwin Kulk, head of service development and management at EBA CLEARING.
“Aside from delivering a simple and transparent service for end-users, our key aim is to keep things easy for financial institutions: the fact that there is no need to connect to a separate payment system should make the service very attractive for RT1 and RTP participants of all sizes.”
SWIFT’s chief strategy officer David Watson comments: “The interlinking of instant payment systems promises a new way of moving money across borders safely, quickly, and at low cost.
“SWIFT’s enhanced platform and transaction management capabilities create a flexible and efficient way to interlink multiple instant payment schemes while enabling banks to re-use their existing investment, and we look forward to supporting the development of the IXB pilot service.”
SWIFT has been particularly busy over the course of the last year. It has collaborated with SETL to innovate within the tokenised asset market; and partnered with MonetaGo to fight financing fraud within trade finance.
Within the realms of international payment services, the financial messaging provider recently enabled banks to verify payee account details before an international payment is sent, removing a key point of friction in cross-border transactions.
In addition to this, it went on to announce this week that it will enable financial institutions to connect to its network and applications through public cloud providers Amazon Web Services (AWS), Google Cloud and Microsoft – a move that will streamline access to its services and enable new innovation while ensuring robust resiliency and security.
And clearly SWIFT are ready to progress IXB even further, with the most recent news of its collaboration with TCH and EBA CLEARING.
The IXB initiative is supported by a variety of global banks Wells Fargo, J. P. Morgan, HSBC and Deutsche Bank, among others.
“We are eager to progress the IXB service from proof of concept to something beneficial for our clients,” said Cyrus Bhathawalla, global head of real-time payments at J.P. Morgan.
“With our global footprint and experience with instant payments and FX, we provide a consistent faster payment experience – end-to-end and across regions.”
Ulrike Guigui, EVP and head of enterprise payments for Wells Fargo, added: “Through this transformative solution, we see the possibilities of enabling faster, more frictionless cross border payments, and providing a better end-to-end customer experience. Wells Fargo will continue to be a leader in this work and we are excited to engage and grow the IXB initiative.
It is envisaged that the IXB pilot service will be followed by a full service offering in 2023.
The key features of the service will be aligned with the focus areas related to speed, access, cost and transparency, as outlined by the Committee on Payments and Market Infrastructures (CPMI) and Financial Stability Board (FSB) for enhancing cross-border payments.
By providing a model that can be replicated across other currency corridors and payment systems, the IXB initiative is expected to provide even greater opportunities for financial institutions and their customers around the globe.
