FAST, the interbank cooperative based in Brussels, launched its first active cross-border instant payment connectionThis could have important implications for the global payments landscape.
The cooperative announced Thursday that UK-based Lloyds Banking Group is the first to be connected to SWIFT gpi Instant, the high-speed cross-border channel that processes payments in seconds. The payment system connects SWIFT gpi to the UK’s fastest payment infrastructure and enables customers to send cross-border payments 24 hours a day, seven days a week.
According to SWIFT, the new system is:
“(…) enables banks to leverage the existing infrastructure to provide better service around the clock with faster speeds, clearer interest rates and most importantly, predictability when an end beneficiary’s account will be credited.”
SWIFT, which stands for Society for Worldwide Interbank Financial Telecommunications, has become the global standard for secure international payments and commercial finance. However, the network has been criticized for its costly and slow inefficiencies.
SWIFT’s global payment innovation (gpi) emerged from this criticism. GPi was introduced in 2017 and improved payment tracking and tariff transparency in more than 1,100 national corridors.
Despite these improvements SWIFT innovations may not be fast enough. How observed the Financial times In December 2018, SWIFT’s emerging competitors are not limited to startups like TransferWise and Revolut, but also to large financial institutions that use blockchain technology.
Under the direction of JPMorgan, lAn Interbank Information Network is a blockchain consortium that uses distributed ledger technology to improve compliance and reduce processing delays. The network, to which more than 130 banking partners belong, was renamed Liink and is based on the Onyx blockchain.
Blockchain technology has been identified as one of the major disruptive factors in the global payments landscape.. Unlike SWIFT, blockchain enables decentralized cross-border transfers, which means payments are approved directly.
Ripple is perhaps the best-known example of a blockchain-based global remittance system. The decentralized infrastructure of RippleNet offers payment processing in 3 seconds and a failure rate of 0% for the messaging system.
The use of SWIFT as a weapon through the aggressive use of sanctions has also forced certain countries to orientate themselves towards blockchain. Turkey, Venezuela, Iran and Russia have experimented with blockchain platforms to create parallel financial systems.