Adding value to the payment process

Those involved in the development of Swift gpi recognize that it is part of a sustained move from the banking community to create a new standard for cross-border payments. “Swift gpi enables us to provide a more efficient and transparent service,” says Grosemans. “The challenge for BNP Paribas is how to pass on this value to the client, either in existing banking products or through new industry services.”

The first element of this process is enabling clients to track and trace payments. In the past, the bank could confirm payment execution to a client, but that client would rely on the bank to create the ultimate end-to-end tracking reference, or UETR, and would then have to reconcile it back to their own system.

This is not a straightforward process because the client would also have their own reference to add to the payment.

In addition, the client would have to rely on the bank’s e-banking software to follow the status of the payment. Since corporates typically work with multiple banks they would have to do this many times.

“BNP Paribas is now launching ‘pay and trace’, which will enable clients to generate themselves the UETR that will travel around the network with the payments,” says Grosemans. “The client will receive automatic status updates on the payments ‒ into their ERP or TMS ‒ until they are received by the beneficiary banks.”

Another service being developed within the network of Swift, banks, software providers and corporates is the tracking of incoming payments that have been originated but not yet reached the corporate’s account, a facility deemed to have considerable potential.

“We hope to introduce this service in the coming months and are keen to continue co-creating value-added services with our clients,” adds Grosemans. 

Swift has also launched a proof of concept around Request to Pay (RtP), which will provide accounts receivable organizations with more control over the collection process. The value of RtP being delivered through a trusted channel is that the payer has the assurance that the collecting entity has been verified and that the transaction can be authorized before any money is taken from their account.

Swift gpi was developed to address issues facing customers at scale by providing implementation projects to the banking community that are easy to manage, explains Delbaere. “The key feature of pay and trace is automation in the corporate back office. We are collaborating with treasury management system vendors so they can integrate this information into their treasury dashboards.”

Swift gpi not only facilitates faster payments, it also supports more detailed analysis of the cost of making cross-border payments, potentially enabling corporates to reduce their transaction cost end-to-end and identify any undesirable FX conversions. By providing more transparency on fees and FX conversions, it allows corporates to identify the most efficient service for their cross-border payments.

“This supports a new dimension of analytics to identify pain points, whether it is done from the bank to the corporate or the corporate does this internally,” says Delbaere.

Grosemans observes that, by next year, every bank (even those that don’t adhere to the Swift gpi rulebook) will have to confirm credit in an account on their books, enabling full end-to-end status reporting for all cross-border payments on Swift.

“This does not address the issue of some banks not processing as fast as we would like them to process, but it will allow us to close the loop and move closer to Swift gpi being the standard for cross-border payments,” he adds.

Delbaere agrees that it will become increasingly difficult for banks that don’t support Swift gpi to maintain credibility with their corporate customers.

“We very much see this as a key step in the journey to instant international payments,” he says. “We are also doing a lot of work in the area of pre-validation, which is a major component in enabling international instant payments since it allows the initiating bank to check whether the account exists and can receive funds through an API. But there will be other problems to solve, step by step.”