The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has recently announced plans to test a cross-border global payments initiative (gpi) in Asia Pacific using Australia’s real-time payments system - New Payments Platform (NPP). However, the success of the gpi service will depend on the cost it will pass on to businesses and consumers, says GlobalData.
In anticipation of the launch of NPP in Australia in early 2018, GlobalData released a report in October 2017 featuring various real-time retail payment platforms around the world, predicting possible implications for the service, including the creation of the necessary conditions for instant cross-border transfers. SWIFT’s gpi payment service in Australia is the first step on such a path.
Arnie Cho, Financial Services Analyst at GlobalData, says: “With the region becoming more integrated in terms of business and particularly e-commerce, a cross-border instant payment system will be an attractive service among SMEs.”
Currently, the SWIFT gpi service will only serve payments from participating banks in China, Singapore, and Thailand. The participating banks will use the NPP platform to transfer funds into the customer’s account in Australia almost instantly. Funds will also be paid to the mobile number or email address associated to the PayID of the payee in Australia.
Cho adds: “Going forward, once the service is officially rolled out both banks and consumers will benefit. For participating banks, it will save them from having to invest in their own cross-border infrastructure as they can use the SWIFT platform to offer the service that once would have taken a few days to clear. On the consumer front, instant cross-border payment will be a nice-to-have on the occasions when a fund transfer to someone in another country is urgent.”
However, with all the different cross-border payment channels already available, the most critical issue that SWIFT will have to address is the cost it will pass on to businesses and consumers. If the service is not cost competitive compared to other readily available services, SWIFT may end up only serving the needs of consumers who are in urgent need of international transfers.
Cho concludes: “Consumers or businesses that make transfers on a regular basis, which will be the majority of those requiring cross-border payments, will most definitely choose a more economical channel. So this is a great step, but one that needs to be cost-aware if it is to make a big impact in the cross-border payments market.”