SWIFT Prepares for Testing Stage of Blockchain-based Cross-border Payment Platform
SWIFT estimates billions of dollars could be freed up from international banks' nostro accounts
After announcing its selection of Hyperledger's Fabric project as the underlying technology for its blockchain-based cross-border payment platform, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) has completed concept verification for the project and is now preparing for the next testing stage.
This project aims to replace SWIFT's current cross-border settlement system with a distributed ledger to improve efficiency and reduce maintenance costs. If successful, SWIFT estimates that the tests with participating banks could free up billions of dollars from international banks' nostro accounts, which are used for holding foreign currencies for transactions.
Participating banks hope to complete their own tests in September, after which the results will be reviewed by 22 additional banks.
Despite the impact of the project and blockchain technology in the banking industry, SWIFT remains skeptical of distributed ledger technology, particularly when it comes to real-time payment-related technology.
Image source: swift.com
Ripple, a blockchain start-up company, is targeting financial institutions with its real-time payment model using distributed ledgers.
Image source: techcrunch.com
Payment Innovation and Real-Time Payments
Payment innovation has been one of the most significant trends in the financial sector in recent years. Technology has changed the way people make payments, and new payment methods have emerged to meet the demands of consumers and businesses alike. While payment innovation has undoubtedly driven changes in the payment industry, the question remains whether it has led to real-time payments.
Real-time payments refer to the ability to process payments almost immediately, rather than waiting for the payment to clear through the banking system. This capability has become increasingly important as businesses and consumers demand faster and more efficient payment processing. While payment innovations such as mobile payments and contactless payments have made payments more convenient, they have not necessarily resulted in real-time payments.
Although some payment systems, such as PayPal and Venmo, process payments instantly, these payments still have to be cleared through the banking system, which can take several days. However, the rise of blockchain technology and cryptocurrencies has the potential to facilitate real-time payments. Blockchain technology enables peer-to-peer transactions without the need for intermediary banks, which can significantly speed up payment processing times.
In conclusion, payment innovation has undoubtedly driven changes in the payment industry, but it has not necessarily driven real-time payments. While new payment methods such as mobile payments and contactless payments have made payments more convenient, they have not necessarily resulted in faster payment processing times. However, the emergence of blockchain technology and cryptocurrencies has the potential to revolutionize the payment industry and make real-time payments a reality.