Real-time cross-border payments represent a logical next step in the development of faster payment systems around the world. While most real-time payment networks have been designed to process domestic or single-currency transactions, connecting these systems could eventually allow international payments to benefit from the same speed and availability.
BBVA participated with five other financial institutions in a pilot connecting SWIFT gpi with the U.K.’s Faster Payments Scheme. The successful test demonstrated how an international payment could connect with a domestic instant payment system, potentially eliminating time-zone restrictions while providing customers with faster processing, payment tracking, and greater transparency.
Since the onset of various real-time payments systems being launched on a regular basis across various global markets, there were 56 active real-time payments systems, as of the last time I checked. Because these were/are all domestic (more accurately single currency) systems, it was logical to expect that eventually real-time cross-border payments would follow.
Real-Time Payments Begin Moving Across Borders
We are starting to see this eventuality and expect that, in the next couple of years, it will be a more commonplace thing in certain corridors. This release at BBVAs site announces the successful pilot of integrating SWIFT gpi with the U.K.’s faster payment scheme:
‘The BBVA Group participated in this new pilot, together with five financial institutions in Europe, North America and Asia-Pacific. The goal was to test the integration of SWIFT gpi with the British instant payment platform ‘The Faster Payments Scheme’ (FPS)….The pilot was successful and showed the global potential that exists to eliminate the time zone restrictions, which will no longer be an obstacle to payment processing. It also demonstrated that gpi SWIFT’s integration with instant payment systems is globally scalable….“With the integration of SWIFT with the Faster Payment chamber, we are going to further enhance customer experience, adding real-time processing of payments in British pounds to the benefits gpi already offers, tracking from start to finish and transparent costs,” explains Raouf Soussi, the head of Corporate Payment Strategy at BBVA.’
SWIFT gpi Connects With the U.K. Faster Payments Scheme
So theoretically, if one were initiating a cross-border payment from the U.S. to the U.K. through a BBVA account using SWIFT gpi and a wire transfer, the payment can connect to the U.K. faster payments system and settle in local currency in real-time. We assume that it would be a BBVA account on the receiving end and that currency conversion occurred as well. So the cross-border space continues to see innovation on a regular basis.
‘BBVA has supported this initiative since the onset, making it the first bank in Spain, Mexico, Peru and Turkey to offer this service, and the first Spanish bank to give its customers access to all the information on their international payments. BBVA is now offering this service on its channel BBVA net cash, on the SWIFT FIN (MT101) channel and on the direct ‘host to host’ channel, through which its customers can enjoy the benefits of this initiative.’
Since the onset of various real-time payments systems being launched on a regular basis across various global markets, there were 56 active real-time payments systems, as of the last time I checked. Because these were/are all domestic (more accurately single currency) systems, it was logical to expect that eventually real-time cross-border payments would follow.
We are starting to see this eventuality and expect that, in the next couple of years, it will be a more commonplace thing in certain corridors. This release at BBVAs site announces the successful pilot of integrating SWIFT gpi with the U.K.’s faster payment scheme:
‘The BBVA Group participated in this new pilot, together with five financial institutions in Europe, North America and Asia-Pacific. The goal was to test the integration of SWIFT gpi with the British instant payment platform ‘The Faster Payments Scheme’ (FPS)….The pilot was successful and showed the global potential that exists to eliminate the time zone restrictions, which will no longer be an obstacle to payment processing. It also demonstrated that gpi SWIFT’s integration with instant payment systems is globally scalable….“With the integration of SWIFT with the Faster Payment chamber, we are going to further enhance customer experience, adding real-time processing of payments in British pounds to the benefits gpi already offers, tracking from start to finish and transparent costs,” explains Raouf Soussi, the head of Corporate Payment Strategy at BBVA.’
So theoretically, if one were initiating a cross-border payment from the U.S. to the U.K. through a BBVA account using SWIFT gpi and a wire transfer, the payment can connect to the U.K. faster payments system and settle in local currency in real-time. We assume that it would be a BBVA account on the receiving end and that currency conversion occurred as well.
Payment Networks Move Toward Faster Global Settlement
So the cross-border space continues to see innovation on a regular basis.
‘BBVA has supported this initiative since the onset, making it the first bank in Spain, Mexico, Peru and Turkey to offer this service, and the first Spanish bank to give its customers access to all the information on their international payments. BBVA is now offering this service on its channel BBVA net cash, on the SWIFT FIN (MT101) channel and on the direct ‘host to host’ channel, through which its customers can enjoy the benefits of this initiative.’
Connecting SWIFT gpi with domestic faster payment systems could provide an important building block for real-time cross-border payments. Rather than replacing existing international payment infrastructure, this approach could allow established networks to connect with faster domestic systems and deliver payments to recipients in local currency more quickly.
The BBVA pilot also demonstrates how collaboration among banks, international payment networks, and domestic payment systems could gradually extend real-time capabilities beyond national borders. As more connections are established between these networks, faster cross-border payments could become practical across an increasing number of payment corridors.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
