SWIFT, the financial messaging services provider, has announced the go-live of a new service that enables real-time payment validation to reduce errors, exceptions, and costs caused by wrong or missing information.
The payment pre-validation service will enable banks to verify payee account details before an international payment is sent, removing a key point of friction in cross-border transactions.
The new service is a core building block in SWIFTS strategy to drive instant and frictionless transactions worldwide. This check is similar to what already occurs in some domestic markets except the SWIFT service will go much further - solving the issue for up to 11,000 institutions and 4 billion accounts in 200 countries.
Most cross-border payments are processed without issue, but one of the leading causes for those that fail or lose time is incorrect beneficiary information – from misspelled names to transposed account numbers.
And because they are detected late in the process, these problems can be time-consuming and costly to resolve. SWIFT’s new service tackles this problem by allowing a sending bank to confirm account details, via an API, with the receiving bank from the very beginning of the process. This way any problems with accounts or data are identified right up front.
SWIFT developed the payment pre-validation service in close cooperation with financial institutions, and several major global banks have already signalled their commitment.
HSBC and Wells Fargo say the service an important step
Thomas Halpin, HSBC’s global head of payments product management said pre-validation is an important step in helping corporates to make simpler, faster, and more secure cross-border payments. “This feature will ensure customers can send payments in confidence, and the increased security brings benefits not just for customers but for the entire payments community.”
Wells Fargo head of payments, George Doolittle said: “The transformative value of SWIFT’s payment pre-validation service is the decrease in friction, resultant cost efficiency and improved client experience of understanding and correcting format issues before they result in a repair or inquiry at the beneficiary’s bank or creditor’s agent which can bring great benefits to our industry. This service addresses a key challenge in the cross-border payment industry.”
SWIFT said it will continue innovating the service, and over the coming months will offer additional checks based on reference data encompassing millions of transactions to further predict, at the point of initiation, when a transaction may potentially run into friction points along the way.
Over the next two years and beyond, SWIFT will transform its platform to enable instant and frictionless payments anywhere in the world. It aims to significantly improve end-to-end efficiency, reduce total costs, and to create services that equip financial institutions to capture growth and create new, differentiated customer experiences.