SWIFT (Society for Worldwide Interbank Financial Telecommunication) is starting tests of their messaging services that transport Instant Credit Transfers ( ) to all Clearing and Settlement Mechanisms ( ) that choose to offer SWIFT connectivity. In this interview, Carlo Palmers discussed the various aspects of the scheme as well as of SWIFT’s new service that will go live in November 2018.
Q. Could you explain how SWIFT will be supporting payment service providers ( ) in their Instant Credit Transfer ( ) services?
SWIFT will be providing access to all Payments Service Providers ( ) that choose to use SWIFT connectivity. In November 2018, they will be able to use our service to go live with TARGET Instant Payment Settlement (TIPS) and RT-1. Beyond that, we are in discussion with other Clearing and Settlement Mechanisms ( ) to offer the same Instant connectivity to any direct participant to their instant payments (IP) services. Therefore, that wish to use SWIFT to transfer their transactions to the IP service providers can re-use (part of) their existing SWIFT infrastructure, and install the new SWIFT footprint (Alliance Gateway Instant) that supports 24/7, instant messaging over the SWIFTNet Instant network.
Q. Is the preparation for offering messaging services compliant with already complete? What are the major challenges you came across during the implementation of these new services?
The preparation on SWIFT’s end is complete. Internal testing is ongoing and E2E piloting with both pan-European IP service providers will start in September. As SWIFT’s offer focuses mainly on the network connectivity, we are re-using our expertise from the Australian New Payments Platform (AU-NPP) project, where similar challenges had to be overcome.
The major challenges in this domain are not the latency and speed, as many would expect, but the 24/7 guaranteed availability: the network as well as the endpoints at -and CSM-side have to foresee full 24/7 operations, even during upgrades, releases, unforeseen outages of any hardware component, etc…
Q. What are the opportunities that you see for European with regard to the scheme?
European are today stepping into different IP projects and this is inevitably requiring the establishment of new procedures and the installation of new hardware and software infrastructures. On one hand, this opens up a multitude of customer service opportunities towards end-consumers, to an extent we cannot foresee today yet. It is comparable to the creation of the tablet/smartphone before the first app was invented. On the other hand, this new infrastructure is the perfect foundation for Eurosystem’s future Single Market Infrastructure Gateway (ESMIG) and it prepares both regional and global players for connecting to other domestic IP infrastructures and to their correspondents throughout the world.
Q. How do you see the scheme evolve in the future?
As soon as there are sufficient participants, wide adoption and pan-European support for the , the scheme may become the default market practice for . We see it as the basis for additional pan-European schemes supporting a wide variety of use cases that benefit from instant transactions (e-ordering, bill presentment, request for transfer, niche high value services, instant debits, dedicated overlay services such as parking payments and e-commerce platform transactions, etc). Once generally accepted and entrenched in society, consumers will expect to receive the same service when they travel abroad. That will require the scheme to link to other market practices, currencies, systems, most probably through a well-established and proven cross-border infrastructure such as Global Payments Innovation (gpi).
Q. How different is Europe from the rest of the world regarding real time payments based on SWIFT’s global experience?
The biggest difference is of course that all other systems so far have a single operator, a single jurisdiction, a single currency, a single central bank and a single scheme with an agreed market practice.
The European situation requires systems to interoperate, and banks to support different domestic flavours, disbursed liquidity pools, comply with varying legislations and still offer the required pan-European reach in highly domestically concentrated markets. Similarly, Value Added Services such as proxy databases or fraud detection applications, are more complicated to establish as they require the support of various market practices and they have to interoperate to offer a truly European experience to the end-consumer.
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