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The Clearing House, EBA Clearing, a provider of pan-European payment-infrastructure technology, and financial-messaging specialist SWIFT have completed a proof-of-concept aimed at introducing faster cross-border payments than are currently available.
The three member-owned companies announced Monday they have finished a project to synchronize cross-border payments occurring in one instant-payment system with settlement in the other and to convert real-time messages for use in cross-border payments between both systems.
Dubbed the Immediate Cross-Border Payments initiative, the pilot demonstrated that existing regional instant-payment systems can be leveraged for cross-border payments, the networks said. It also indicated to financial institutions of all sizes a solution for speedy cross-border payments without having to build or connect to a separate network, they added.
“Currently, cross-border payments can take hours or days depending on the transaction,” says a spokesperson for TCH, in an email message. “Often, these transactions do not have full transparency, and a failure might not be known for days. The [new] initiative aims to synchronize existing domestic faster payment systems to facilitate cross-border payments.”
Eleven financial institutions participated in the pilot: Bank of America Corp., BBVA Group, Citicorp LLC, Crédit Agricole, Deutsche Bank AG, HSBC, The ING Group, Intesa Sanpaolo Bank, J.P. Morgan Chase & Co, PNC Bank, and Societe Generale S.A.
A key feature of the Immediate Cross Border Payments initiative is its use of ISO 20022 message standards, which are said to allow for innovation and increased competition, as well as speed, access, lower cost, and transparency, as outlined by the Committee on Payments and Market Infrastructures and Financial Stability Board with respect to enhancing cross-border payments.
Now that the pilot is completed, the three companies say they plan to replicate their cross-border payments model across other currency corridors and payment systems, though no one is venturing a timetable. For now, the project is focusing on the U.S.-Euro currency corridor, the TCH spokesman says. “It is currently still in development,” he adds.
“The Immediate Cross Border Payments Initiative demonstrates how the current ecosystem of cross-border payments may be enhanced and made suitable for new high-volume 24/7 business,” Erwin Kulk, head of service development and management at EBA Clearing, said in a prepared statement. “In combination with an international request to pay, its potential applications would be limitless.”
SWIFT is a messaging platform that connects more than 11,000 banks and securities institutions, market infrastructures, and corporations in more than 200 countries.
The Clearing House operates the Real Time Payments network, in the United States, as well as CHIPS, said to be the largest private-sector U.S. dollar clearing system in the world.
“The Immediate Cross Border Payments Initiative … together with a working group of 11 leading U.S. and European financial institutions, demonstrates that faster cross-border payments between existing real-time systems are possible in one of the world’s largest currency corridors,” Mark Monaco, head of enterprise payments at Bank of America, said in a statement. “Having faster payments with transparent proof of settlement is a benefit for customers and economies on both sides of the Atlantic.”
