As those who have been following these pages and various member research for the past several years will know, the topic of cross-border payments has been high on the priority list for innovative approaches. We have also been pointing out in our various faster payments research that the domestic real-time rails that have been rolling during the past 5-10 years would eventually start to connect across borders. This piece in American Banker shows that this eventuality is perhaps closer than previously thought.
‘The successful instant transfer of funds from the U.S. to Europe took place in recent weeks as part of the new Immediate Cross-Border Payments (IXB) initiative orchestrated by Swift, The Clearing House and EBA Clearing, the organizations said Tuesday…
The Society for Worldwide Interbank Financial Telecommunications, TCH and EBA Clearing said in a press release that they had collaborated to prove the feasibility of instant cross-border payments in a test involving 11 banks…
Bank of America, BBVA Group, Citigroup, HSBC Holdings, Intesa Sanpaolo Bank, JPMorgan Chase and PNC Financial Services Group directly participated in the proof of concept, in which banks exchanged messages to synchronize the transmission of test transactions sent between domestic instant payment networks on each side of the Atlantic, the release said…
The effort underscores rising pressure on incumbent payment networks to modernize the cross-border payments experience as fintechs and blockchain innovators like Ripple introduce faster and cheaper ways to send funds globally.’
Starting with the DLT networks a few years ago, we saw how instant settlement could take place across borders. This spurred on the Swift gpi (Global Payments Innovation) development to speed up settlement and improve the transparency of cross border remittances as well. We have seen the initiatives underway in southeast Asia as well as in Scandinavia. So, bringing together dominant wire transfer rail owners from the U.S. and Europe would seem a good way to reach a lot of banks with a new approach.
‘IXB’s next move will be to test its instant solution for cross-border payments in other key remittance corridors, the release said… Observers say IXB could prove valuable for certain types of payments as consumer and cross-border payments continue to expand with the rise of the international gig economy and growing global e-commerce payment volume between commercial buyers and suppliers.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group