The approach to cross-border payments should be one that is holistic, utilising financial rails that are ubiquitous, free of friction, fast, standardised and supported by the industry globally.
January 02, 2019 | Michael Moon
Much of the focus in 2018 was on the emerging possibilities in the world of cross-border payments. As we enter 2019, the conversation has shifted towards how companies can capitalise on cross-border payments to grow their businesses.
We know that the approach to cross-border payments should be one that is holistic, utilising financial rails that are ubiquitous, free of friction, fast, standardised and supported by the industry globally. This knowledge will translate into major initiatives that include instant or real-time cross-border payment services across the region. Such services will help the industry remain compliant and secure through innovative fraud management tools while driving operational efficiencies via new payment standards.
While the concept of instant payments is not new, underlying business process frictions prevent the industry from fully realising it. These impediments need to first be addressed before payment processes can be optimised and its visibility maximised. A number of instant cross-border payment systems such as SWIFT gpi, have been launched to address these frictions, and this is a trend that is set to continue globally.
Since its 2017 launch, SWIFT gpi has gained the support of over 300 financial institutions, including the world’s 60 biggest banks. It is now being used to send hundreds of billions in payments every day, many of which are made within minutes or even seconds, and accounts for 55% of SWIFT’s cross-border traffic.
In addition, the introduction of new schemes will see the increased linkage of cross-border services with domestic real-time networks across the Asia Pacific region. In the case of SWIFT gpi, a proof-of-concept completed in October 2018 demonstrates that enabling gpi in real-time domestic systems allows payments to be effected almost instantly, even when they involve domestic settlement and non-gpi banks. The fastest SWIFT gpi payment in the trial was sent from China, reac...
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