SWIFT trials instant cross-border gpi payments through TIPS
The European Central Bank (ECB) and SWIFT have launched an initiative to extend the reach of instant cross-border payments deeper into the European market by enabling SWIFT gpi in the TIPS system.
A group of banks will carry the cross-border legs of the payments, which they will then settle through TIPS, allowing for instant crediting of accounts at ultimate beneficiary banks across Europe. By processing gpi payments instantly, even when the final leg of the payment needs clearing in the destination country, ubiquitous availability of real-time cross-border payments is achievable.
Half (50%) of gpi payments are credited to end beneficiaries within 30 minutes, with 40% in fewer than five minutes. However, payments are sometimes delayed when the final legs need to be cleared within the recipient country. This is due to the limited operating hours of local clearing systems. Through real-time, 24/7 availability of central bank money provided by TIPS, these frictions can be removed, allowing payments to be credited in seconds.
SWIFT ran a similar trial last year with Australia’s domestic instant payment system, the New Payments Platform (NPP), and a group of banks from Australia, China, Singapore and Thailand. The trial demonstrated that by enabling gpi in real-time domestic systems, cross-border payments could be effected almost instantly, even when they involve domestic settlement and non-gpi banks.
SWIFT is now working with its community to extend the scope of this initiative to other real-time systems around the world. The banks taking part in the European pilot include Banque Internationale à Luxembourg, BBVA, Deutsche Bank, Natixis, Santander and UniCredit.