SWIFT disclosed its first payment link allowing for instant cross-border transactions. This is a move that could have a huge impact on the financial industry.
Payments settled in seconds
SWIFT announced on Thursday, the UK’s Lloyds Banking Group was the first to connect with SWIFT gpi Instant – a high-speed cross-border network that settles payments in seconds. The payment system connects SWIFT gpi with the UK’s Fast Payments infrastructure (U.K.’s Faster Payments). In this way, it enables customers to send cross-border payments 24 hours a day, seven days a week. According to SWIFT, the new system:
“It enables banks to use existing infrastructure to provide better 24/7 service with greater speed, fee transparency and, most importantly, predictability of when funds will end up in the final beneficiary’s account.”
SWIFT, which stands for Society of Worldwide Interbank Financial Telecommunication, has become the global standard for secure international payments. However, the network was criticized for its cost and time-consuming nature. It seems that SWIFT’s innovation in global payments, or gpi, was born out of this criticism. Introduced in 2017, the gpi system improved payment tracking and payment transparency across more than 1,100 national channels.
Blockchain it’s faster anyway
Despite these improvements, SWIFT innovations may not be fast enough. How he noticed “Financial Times” in December 2018, emerging competitors of SWIFT are not only start-ups such as TransferWise and Revolut, but also large financial institutions using blockchain.
The Interbank Information Network run by JPMorgan Chase is a consortium that uses the technology DLT to increase compliance and reduce delays in data processing. Since then, the network of over 130 banking partners has changed its name to Liink and is based on the Onyx blockchain.
Unlike SWIFT, blockchain allows you to make cross-border transfers in a decentralizedwhich means payments are approved directly. The largest known example of a blockchain-based global money transfer system is Ripple. Decentralized The RippleNet infrastructure boasts three-second payment processing and a 0% system failure rate.
Some countries have also been forced to take advantage of blockchain due to sanctions imposed by SWIFT. In order to create parallel financial systems with blockchain experimented including Turkey, Venezuela, Iran and Russia.