SWIFT to eliminate frictions in international payments by upfront verification
With increased competition from fintechs, cross-border payment incumbents are being forced to step up their game against the disruptors. Companies are trying to pitch their newly launched products and services to run B2B payments quicker and at a low cost.
This week, Belgium headquartered interbank payments consortium SWIFT announced that it has gone live with a service that will enable banks to verify payee account details before an international payment is sent, removing a key point of friction in cross-border transactions.
SWIFT said that the new ‘Payment Pre-validation service is a core building block in SWIFT’s strategy to drive instant and frictionless transactions worldwide’. It noted the cross-border payments processing issue wherein if ‘one of the leading causes for those that fail or lose time is incorrect beneficiary information – from misspelled names to transposed account numbers’ and because they are detected late in the process, the issue can be ‘time-consuming and costly to resolve’.
To tackle this, SWIFT’s Payment Pre-validation service allows a sending bank to confirm account details, via an API, with the receiving bank from the very beginning of the process so that any data or account problems are identified right upfront.
“Pre-validation is an important step in helping corporates to make simpler, faster and more secure cross-border payments. This feature will ensure customers can send payments in confidence, and the increased security brings benefits not just for customers but for the entire payments community,” said Thomas Halpin, Global Head of Payments Product Management, HSBC.
SWIFT noted that it has developed this system in close cooperation with financial institutions and major global banks have already signalled their commitment to the service. It will continue to innovate the service and in the coming months, it will offer ‘additional checks based on reference data encompassing millions of transactions to further predict, at the point of initiation, when a transaction may potentially run into friction points along the way’.
Last month, International banks endorsed SWIFT’s transaction management platform which according to SWIFT would enhance the cross-border payments.