Corporate treasurers and payments gurus alike have to have taken note of the abundance of faster and real-time payments initiatives currently under development around the globe. Certainly one of the most interesting programs out there is SWIFT’s new Global Payments Innovation Initiative (GPII), which is intended to streamline cross-border payments.
A lot has been written about the initiative, especially the key features:
- Same-day availability of funds: Cross-border payments will appear in the seller’s account the same day the payment is processed.
- Transparent and predictable fee structure: There will be no hidden fees that the treasurer does not know about. The amount that gets to the seller’s account should therefore be known and be reconciled right away.
- End-to-end tracking of payments: Through this initiative, banks have agreed to send back a confirmation to the buyer that the seller’s account has been credited. This should lead to less friction between buyers and sellers.
- Enhanced remittance information capabilities: Extended remittance information will be sent unaltered to the receiver. SWIFT has made no mention of a specific standard, but it will be very helpful if corporates can include all the necessary remittance data along with payment messages.
I find this initiative very interesting as it seems to provide a number of enhancements within the existing rails. Anyone responsible for sending payments overseas will certainly be familiar with issues such as time delays for unknown reasons, additional fees that impact the final amount deposited into the payee’s account, etc.
Given the key features of the GPII, I am also very hopeful cross-border transactions will be easier for corporates in the future. However, one must not forget the whole picture. There are still uncertainties regarding the final pricing banks will charge, as well as practical implementation. Will this initiative require corporates to make any internal changes to their payments processes? How much time and resources will that take?
Hopefully, the answers to those questions and more will become a bit clearer in the coming weeks.
I’ll be discussing this subject at two upcoming events: Sibos attendees can check out The Global Payments Innovation Initiative: A New Standard in Cross-Border Payments and AFP Annual Conference attendees won’t want to miss the Payments Roundtable.