EBA CLEARING, SWIFT and TCH to pilot fast cross-border payments

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Banks from both sides of the Atlantic have successfully exchanged payment messages for a faster cross-border payments as part of a proof of concept demonstrating the feasibility of synchronising settlement across existing instant payment systems in one of the world’s largest currency corridors.

EBA CLEARING, SWIFT and TCH team to pilot fast cross-border payments

The three private-sector, member-owned companies, EBA CLEARING, SWIFT and The Clearing House (TCH), completed a proof of concept as part of a new initiative, Immediate Cross-Border Payments (IXB), that demonstrates the ability to synchronise settlement in one instant payment system with settlement in the other and convert real-time messages between both systems.

The concept could be expanded to additional currencies and is also replicable for more liquidity-efficient high-value payments.

The IXB initiative has had 11 banks contribute to the design, with seven banks – Bank of America, BBVA Group, Citi, HSBC, Intesa Sanpaolo Bank, J.P. Morgan and PNC Bank – participating in the proof of concept, where the banks successfully exchanged payment and confirmation of receipt messages.

The initiative responds to the rising expectations of consumers and businesses who have experienced the benefits of domestic real-time payments and now have similar expectations for cross-border transactions.

The IXB proof of concept shows that existing regional instant payment systems can be leveraged for cross-border payments and could provide financial institution participants of all sizes with access to a solution for cross-border payments without the need to build and connect to a separate network.

By taking advantage of existing infrastructure, technology and standards, IXB can help to satisfy, in the near term, customer expectations across the globe for a simple and more transparent way to send cross-border payments.

Further, IXB uses ISO 20022 message standards, which allows for innovation and increased competition and its key features are fully aligned with the focus areas related to speed, access, cost and transparency, outlined by the Committee on Payments and Market Infrastructures (CPMI) and Financial Stability Board (FSB) for enhancing cross-border payments.

The three private-sector companies bring extensive cross-border experience and two real-time payment systems to IXB:

  • EBA CLEARING’s pan-European payment systems connect over 4,800 financial institutions across Europe and include EURO1, a large-value euro payment system, and RT1, a pan-European instant payment system that reaches institutions from 25 different countries and processes 1.5 million transactions per day; and
  • The Clearing House is the operator of the RTP network, the newest real-time payments network in the United States, and CHIPS, the largest private sector USD clearing system in the world, clearing and settling $2 trillion in domestic and international payments per day; and
  • SWIFT’s messaging platform, products and services connect more than 11,000 banking and securities institutions, market infrastructures and corporates in more than 200 countries. SWIFT enables innovation across the financial ecosystem through continuous evolution of its platform aligned with its vision for instant, frictionless end-to-end cross-border transaction management.

“By leveraging the RTP network in the United States and RT1 in Europe, along with ISO 200022 message formats, IXB demonstrates that a faster cross-border payments capability is possible and can be delivered using existing technology,” said Russ Waterhouse, Executive Vice President for Product Development and Strategy at The Clearing House.

“By utilising existing faster payments systems, financial institutions can leverage existing processes, protocols and technology to make the user experience seamless across payment types, whether domestic or cross border.”

EBA CLEARING, SWIFT and TCH are planning to engage in next steps towards developing IXB. By providing a model that can be replicated across other currency corridors and payment systems, the IXB initiative is expected to open up even greater opportunities for financial institutions and their customers around the globe.

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