SWIFT gpi: groundbreaking global payment innovation
In the current tech environment, instant results have become the new standard for everything from selfies to payments. This has been achieved in the consumer payments world, but the institutional payment world has been slow to adopt new technology, until now. In February 2017 SWIFT, the global leader in financial messaging technology, started an initiative to improve the speed, transparency, and tracking of cross border payments for financial institutions and corporations.
Several key features:
· Faster, Same Day Use of Funds: Banks will process the funds in real-time. The instructed GPI Agent will make funds available to the creditor with the same day value unless due to fraud screening the payment is held.
· Transparency of Fee’s: If a fee is charged, the details will appear in a field within the message. Deductible bank charges have to be documented by a countersigned agreement.
· End-to-End Payment’s Tracking: GPI Agent’s provide confirmations to the tracker in the transaction chain; the tracker will relay the same to the former GPI Agents in the same transaction chain when any confirmation is received.
While the innovation is new, the used are remaining the same, with the exception being the addition four new fields in the header. The most important of these new fields is a unique end-to-end tracking number. The Messages involved are the MT103, MT103 STP, MT103 Remit Payments. As an added bonus to early adopters, SWIFT has stated that clients who join, will not be billed in the signing year, but this will be billable for the following year, at differing levels depending on the use of the tracker or not.
This new innovation benefits both banks and corporations alike. For banks, this will reduce costs, increase customer satisfaction and overall help retain & attract new clients. For corporations, the core functions of treasury and accounting will be significantly sped up resulting in greater planning, budgeting, and forecasting accuracy. Currently, over 100 global transaction banks have committed to the SWIFT GPI. You can join this initiative today by joining the SWIFT network and adding the four new blocks including the end-to-end tracking number into the header.
In the case for corporates, it is proposed that an MT101 header block 3 Field 111 & Fields 121 be used to populate a ‘gpi Service Type’ code and ‘UETR’, which is consistent with the gpi Customer Credit Transfer elements use in MT103 messages.
An organization who joins this initiative needs to build the aforementioned blocks, can do so in two ways:
1. They can create the blocks themselves, or;
2. They can authorize Axletree Solutions to set up a configuration within an integration engine, to assist in creating the new unique end-to-end tracking number in the header; this is the recommended approach.
If Axletree clients are at the receiving end, we will push this request to PayPlus, take the confirmation, convert it into an MT199 and send it back to the correspondent. With the help of PayPlus, we can generate an MT910, which is a confirmation of credit. This can be converted into an MT199 meet the guidelines put forth by GPI workgroup and send it out to the correspondent.
· When the sender has initiated a GPI payment to a correspondent, the beneficiary bank must process the payment on the same day if it meets the SLA.
Once set up, payment controls are recommended for outgoing MT103s. We can implement certain controls that regulate the use of GPI payments for its operators, to avoid unwanted exposure. Some of the checks that can be put in place are:
· Place daily-total restrictions on the number of transactions that can be sent out.
· Transactions are set for value date, or else they are discarded, if the transaction is dated June 16, 2017, then the amount will be released on the same day.
· A GPI client can implement a rule to prevent transactions from taking place after business hours; this is a primary recommended control.
An important part of the GPI is protecting clients and their accounts. Setting up various control parameters achieves this goal. Welcome to the new reality of faster payments, more traceability, and greater fee transparency. Talk to Axletree Solutions.