Challenges in Cross-Border Payments and the role of SWIFT gpi

Challenges in cross-border payments


Cross-border payments usually pass through several banks until the funds have been transferred from the payer to the account of the beneficiary. This is referred to as correspondent banking. 


This results in four obstacles that are virtually insurmountable for treasurers as things stand today:


1)   Time: Traditional cross-border payment orders can take several days from being released to being credited – way too long for efficient cash management.


2)   Transparency: Several correspondent banks can act as intermediaries between the bank initiating the payment and the beneficiary bank – an impenetrable banking jungle that causes treasurers sleepless nights for security and compliance reasons.


3)   Tracking: Today, treasurers neither know where a specific payment is located nor when it will be credited to the beneficiary – incalculable business risk and a situation that often leads to time-consuming queries, trying to chase payment.


4)   Remittance data: Remittance data is often altered somewhere along the line or information is lost. Sometimes the amount eventually credited to the account does not match the initial payment order because correspondent banks have deducted fees, resulting in a tedious reconciliation process once the money has arrived.


SWIFT global payments innovation – SWIFT gpi


In January 2017, SWIFT introduced the gpi Service that can be used to process global payments in a fast and traceable manner. The objective is for every one of the around 11,000 SWIFT Network banks to be able to offer money transfers within 24 hours with continuous end-to-end tracking and complete transparency along the entire payment chain by the end of 2020. 


This transparency and efficiency is made possible by using a specific gpi reference, the Unique End-to-End Transaction Reference UETR.



How the Unique End-to-End Transaction Reference (UETR) works 


You can compare the UETR to the tracking number of a parcel: The sender issues a unique, unalterable reference that shows you where the order is located at any one time. This reference ensures complete transparency as well as fully digitized and therefore speedy processing. 


In addition, the sender is automatically notified of any payment status changes. Conventional transfers often drop off the radar for quite some time, and you’re left wondering where your money has gone, not to mention the effort it will take you to retrace and reconcile afterward. 


Conversely, gpi transfers generate an abundance of messages that keep you up to date on the status of your payment.


Use Cases of SWIFT gpi


How Can We Help?

 

We at Nth Exception collaborate with Banks and Financial Institutions to analyze, solutionize, and optimize cross border payment processes. Our service offers are best equipped to help you define a comprehensive roadmap for SWIFT gpi and ISO20022 implementation that will ultimately reduce the overall effort. 


We work with the End Users to define ‘To Be’ Workflows and develop a Target Operating Model focusing on optimization and innovation. 

Reduced lead time between the subscription date and the go-live date makes a positive impact on your capacity to advertise and gain momentum in a fast-evolving market. 


Technology


Our partnership enables you to close the technology loop by implementing mission-critical technology infrastructure for Banks and Financial Services that is proven globally, and are SWIFT certified.  SWIFT gpi APIs, ISO 20022 Translator, Cloud for financial services, and Open Banking APIs.