Up until very recently, international payments were slow and cumbersome, lacking visibility and dependability. With global trade continuing to expand at an unprecedented rate, more and more businesses and individuals are relying on cross border payments.
In response to this increased demand, SWIFT gpi was created to improve the way in which SWIFT users process their payments, saving time and increasing transparency and traceability.
New generation payment solution
SWIFT gpi (Global Payments Innovation) went live in 2017 and is a new generation payment solution enabling safer, faster, and more reliable cross-border payments. Since launch, adoption continues to be rapid, with more than 4000 financial institutions now using the system. The initiative introduced a whole range of solutions that were previously non-existent or very fragmented at best.
The new system was deployed on existing infrastructure, which means that financial institutions can use resources to create additional services around it instead of trying to migrate from existing systems that are historically extraordinarily challenging and risky.
Trillions of dollars in payment transactions are made daily but the mechanics of cross-border payments and the challenges faced by financial institutions when providing such services remain mostly invisible to the public.
What does it do?
SWIFT gpi combines domestic real-time payment networks to deliver cross border payments almost instantly and without the restrictions of bank operating hours. Each transaction is assigned a Unique End-to-End Transaction Reference (UETR) that payment providers can use to trace the transfer from start to finish.
The tracking feature is essential for a straightforward reason: errors and failed transfers are costly. In Europe alone, 2% of international transactions fail, which translates into $21 billion each year.
Gpi also offers a pre-validation feature, which reduces the likelihood of transaction failure by asking the beneficiary bank whether the transaction would succeed with the given information before it is executed.
Simplified case resolution means that the members of SWIFT gpi can resolve payment queries much quicker and without entering into lengthy disputes, which reduces operational costs and improves customer satisfaction.
Gpi substantially increases payment speed. 50% of transactions are completed within 30 minutes, and 96% are completed under 24 hours. Customers no longer need to guess how long the payment may take. It also enables faster business decisions as it is common for customers to request payment status updates, with increased tension between businesses if there are unexpected delays.
SWIFT takes security very seriously. Gpi offers a portfolio of Financial Crime Compliance solutions that help member institutions to navigate more complex compliance requirements. Increased security between institutions also means a safer environment for their customers. Secure payments increase trust and encourage the customer to use the facility more often without fear that the money may be lost somewhere during the transaction,
The initiative provides full visibility of costs and charges deducted by each carrier along the payment route. This greater transparency allows customers to have a clear understanding of the entire payment process. With end to end payment tracking, customers know exactly where their funds are in the payment journey, much like the delivery of an Amazon parcel.
For any cross-border transaction, customers expect that the money will reach the recipient and the amount will remain the same as agreed by the sender institution. SWIFT gpi ensures consistent and dependable transactions that stay consistent even if multiple institutions are involved.
The rapid adoption of SWIFT gpi by the majority of the world’s leading financial institutions is proof that the initiative addresses the challenges the industry has been having for years. Reduced complexity of cross-border payments, faster delivery, and full transparency are critical elements of modern payment technology.
SWIFT gpi already enables $300 billion of daily transactions, with 50% less enquiry-related costs. The daily transfer volume will continue to grow, as financial institutions continue its adoption.
The initiative will continue to keep up with future changes and requirements, with a well-defined roadmap to ensure continuous improvements and introduction of new services along the way.More Insights