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THE "black hole" of cross-border payments may be demystified slowly, as banks in Asia and around the world are keen to tap services to track payment flows, and in time, to recall payments in the event of fraud.
Some 24 banks in the Asia-Pacific have signed up for a new cross-border tracking service launched by payment network service Swift, as the financial institutions seek better ways to meet security and compliance demands using technology.
The service, known as Swift gpi, allows banks to see real-time tracking of payments, Swift announced on Tuesday. Banks will also get same-day payment clearance, and see fees upfront.
The 24 banks are part of more than 110 transaction banks globally that have gone live with the service, or are planning to implement Swift gpi. Flows through these banks make up more than 75 per cent of all cross-border payments going through the Swift network. The Asian banks that have signed up include top Chinese banks, DBS, OCBC and Standard Chartered Bank.
Swift, which is run as a cooperative of member banks, said that it worked on the project for about 18 months at the request of its member banks. It will also look to introduce "stop and recall" payment services in the second phase, with this service expected by next year, said Christian Sarafidis, chief marketing officer of Swift at the launch event. Swift will explore the use of blockchain as well, he added.
ICBC's head of operation management department, Zhang Yi, noted that as Chinese banks are facing intense competition from fintechs, the bank pays "great attention" to payments innovation.
While courier services can offer end-to-end tracking to both logistics companies and consumers, that level of transparency is still lacking for cross-border payments, noted TS Shankar, global head of clearing and liquidity products at Standard Chartered Bank, at a panel discussion.
His personal experience with transferring money to his daughter in the US also shows the "black hole" of where any delays in payment could have been. "We (banks) all have to march together on this one," he said.