Real-time payments (RTP) is a type of electronic payment that allows for the immediate transfer of funds between two parties. Unlike traditional payments, which can take days or even weeks to process, RTP payments are typically processed within seconds or minutes. This makes them ideal for situations where time is of the essence, such as emergency situations or online shopping. RTP is made possible by cross-border cooperation between global card networks, which allows for the instantaneous exchange of funds between banks in different countries. As a result, RTP has the potential to revolutionize the way we make cross-border payments.
One of the most exciting use cases for real-time payments, in my opinion, is really beginning to take shape. As Finextra reported in this article, EBA Clearing, SWIFT, and The Clearing House have been working together for some time on their IXB initiative and they are now ready to pilot with a market-ready solution expected in 2023. There have been other examples of real-time cross-border products in Asia and the Nordics, and let’s not forget that the global card networks have been offering fast cross-border transaction options for years now. But this represents the opportunity for the U.S. real-time payment rails to connect with Europe, with interesting opportunities for both consumer remittance and corporate activity. Here’s an excerpt from the article:
The IXB project follows proof-of-concept trials conducted in October with the support of seven financial institutions. The PoC [Proof of concept] demonstrated the ability to synchronize settlement in one instant payment system with settlement in the other and to convert real-time messages between both systems.
Based on the ISO 20022 message standards, Swift Go and the instant payment systems of EBA Clearing and TCH, the service initially will support instant payments in the US dollar and euro currency corridor.Russ Waterhouse, EVP for product development and strategy at The Clearing House, says: ”The trans-Atlantic pilot service will provide valuable input for the development of a fully-fledged IXB service to meet customer expectations across the globe.”
It is envisaged that the IXB pilot will be followed by a full service offering in 2023.
Jean-François Mazure, head of cash clearing services at Societe Generale, says: “From a user experience perspective, we believe that the IXB initiative represents a significant step towards a faster trans-Atlantic payment corridor, removing frictions and bringing value to all our customers, both individuals and corporates.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group