Tracking international payments, the revolution is on!

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Tracking international payments, the revolution is on!

Interview with Axel Prette, Thétys Product Manager

Axel PretteAxel Prette, THETYS product manager, gives us his analysis on the very topical subject that is the monitoring of international payments. We went to meet him to have an inventory of what will be implemented, a real revolution for this math fanatic!

We have been talking about it for a long time, the construction site is launched this time?

A few months late, banks are finally launching their international payment tracking service. Initially planned for September 2019, finally, now, in early 2020, the first MT199 and pain.002.001.02 files from GPI have been received by company that have subscribed to this new banking service.

As a reminder, this all started in Geneva in 2016 at the Sibos conference. At that time, SWIFT made the promise through its Global Payment Innovation (GPI) initiative to revolutionise international payments.

What level of information can you expect from this service?

At a minimum, the payment status and fees applied by each intermediary bank must always be communicated. That may not seem like much, but it’s truly revolutionary!

 No more calling suppliers to try to figure out ‘where did you send our money?!’ And those of you who are treasurers know how frustrating that situation can be when it involves an extremely important transfer.

As an option, these files can also contain the exchange rates applied, the original currency, and the target currency.

This new transparency for fees and exchange rates could result in future negotiations between our companies and French banks

But how does it work exactly?

The introduction of the unique end-to-end transaction reference (UETR), carried by the SWIFT network across the entire interbank processing chain, has made it possible today to track international transactions in real time.

Created based on a computer technology, the UETR is actually a UUID, a Microsoft system of identifiers developed to guarantee a very (very) strong probability of uniqueness of the identifier in a semi-open system.

With 2122 different possible identifiers (just for comparison, 2100= 1,267,650,600,228,229,401,496,703,205,376), this system offers virtually zero risk of an ID being duplicated!

For the last few months now, banks using the SWIFTNet network are not only required to accept transfers with such an identifier, they must also pass it on to the intermediary banks that will carry out the rest of the transfers, and so on and so forth until the funds are delivered to their final recipients.

These interbank files, MT103s in insider speak, are not only sent to the intermediary banks; a copy is systematically sent to a tracker in charge of centralising the information.

The tracker must then pass on the transfer status to the bank that originally initiated it.

That’s done via the MT199 and pain.002.001.02 files mentioned earlier.

And where does instant payment fit into all this?

While instant payment makes tracking unnecessary because of its instantaneous nature, instant payment represents a tiny fraction of the transfers issued each day, urgent, single transfers. This is mainly for cost reasons, since instant payment requires more resources from banks and from infrastructure.

As for GPI payment tracking, although it’s still just in a start-up phase, it will soon cover all transfer traffic sent over the SWIFTNet network.

At this point, they’re not at all on the same level. We’ll have to see how the situation develops!

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