This was posted on the SWIFT site and describes a payments pre-validation service that network users can access via APIs to eliminate unnecessary formatting errors, which SWIFT suggests is part of the systemic friction causing more than $2 billion annually in added costs. The way it works is that an upfront API is used to check payment formatting details for the beneficiary and receiving country prior to the actual initiation and clearing process so any errors can be corrected, eliminating costly investigations.
‘Whether a multinational corporate, small business or an individual sending money to family abroad, the world heavily depends on the smooth flow of transactions every day. Payments travel across borders, through jurisdictions and in and out of accounts, but throughout this journey delays can occur. These create friction, sending ripples of disruption through our daily lives. They stop shopkeepers from getting the supplies they need on time, impact international supply chains and prevent loved ones from receiving the funds they need, when they need them…..While there are many causes of this friction, including carrying out essential compliance checks and the limitations of legacy technology, we found that 72% of payment exceptions on the SWIFT network are the result of formatting errors, account issues and invalid data. And that can be frustrating, as many of these errors could be avoided – all that’s required is that payments are checked or ‘pre-validated’ before they’re sent so that mistakes can be fixed immediately instead of later down the line. This saves time, reduces delays and most importantly gives customers the best payments experience possible.’
We did not receive a briefing but there is no detail about fees, although the article has links to videos where fee transparency is discussed. It is also not clear as to whether the pre-validation service performs a format or data repair automatically, although we assume not, at least for now. This is something that certain payment hubs, for example, can execute on behalf of the initiating institution. We reviewed this in recent member research. In any event, this is further indication that SWIFT continues to improve the cross-border payments experience for network participants, which began a few years back with gpi then continued with the cooperative’s business decision to offer additional layered services to members.
‘So far, almost 100 banking groups have joined our pre-validation community, using the service to eliminate errors and mistakes in their payment messages. They’re already benefiting from the rich data we provide, and that data will only get richer as more users sign up….And we have plans to keep evolving Payment Pre-validation. We’ll continue to grow our community, introducing new features that enhance the scope of the service and provide more and more value. These include a further expansion into the world of financial crime compliance and fraud prevention, and increased fee predictability.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group