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The Power of SWIFT Gpi Cross-border Payments

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Last editedJan 20222 min read

Although we might live in a technologically enlightened age, until recently the way that corporate cross-border payments were made remained incredibly outdated. It was quite common for treasury offices to feel anxious making any cross-border payment, as there was an incredible lack of transparency and punishing waits for clearance.

In 2017, however, with the rollout of SWIFT gpi, the world of cross-border payments was set to change forever.

When SWIFT isn’t swift enough

The Society for Worldwide Interbank Telecommunications (SWIFT) is a secure network for international payments between financial institutions. If the name SWIFT feels familiar to you, it’s probably because it’s how millions of international payments are made through the network every month.

However, while the SWIFT network represented a major step forward when it first launched in 1973, almost 50 years later a lot has changed, with the growth of the internet presenting perhaps the most drastic fundamental shift in financial history. Many reasoned that SWIFT was becoming outdated and were complaining of a lack of visibility over funds, high fees and delayed payments.

What is SWIFT gpi?

SWIFT gpi (global payments innovation) was created to fundamentally improve the SWIFT network by combining the traditional system with a new set of ground rules that all banks have to follow. These rules are primarily based around solving the perceived problems with the original SWIFT system.

The new standards include greater transparency when it comes to fees, comprehensive payment tracking and faster confirmation. SWIFT gpi was launched in 2017 and in the last 4 years alone almost 4,000 banks have signed up to the service. Today, over $300 billion a day is processed using SWIFT gpi.

The benefits of SWIFT gpi

SWIFT gpi banks will notice a major increase in standards across the board, though they will notice the most significant improvements in the following areas: 

Payment speed – Payments made through the SWIFT gpi network will be much faster thanks to improvements in communications. 

End-to-end tracking – All SWIFT gpi banks will send payments with a unique reference code (UETR) that can be used to trace funds at every stage of their journey. 

Transparency – SWIFT gpi banks must be as transparent as possible with not only their processing fees but also payment times.

Records – Another firm standard of the SWIFT gpi system is that all remittance data remains unaltered from end to end. This means it’s much easier for senders and recipients to match their payments against invoices and orders.

The barriers to SWIFT gpi adoption

For many banks, it’s not as simple as simply updating their systems. A full SWIFT gpi roadmap is required to map out the adoption process. As many as 65% of banks still use legacy systems that are holding them back. These systems might not be compatible with many of the gpi standards, meaning the entire system has to be effectively rebuilt from the ground up. Many financial players are also yet to fully understand the potential of gpi payments.

However, once these banks are able to grasp the improvements in visibility and speed, not to mention the potential applications in forecasting, it’s unlikely there will be a bank left on earth that doesn’t adopt the SWIFT gpi standard. Legacy systems are certainly a problem that needs addressing. But sometimes, starting from scratch can be the best thing in the long term for everyone involved.

We can help

If you’re interested in finding out more about SWIFT gpi, or any other aspect of your business finances, then get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.

Collecting international payments with GoCardless is affordable, reliable & easy to set up with no contracts or upfront commitment.

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Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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