Introduction of Swift’s Enhanced Payment Investigation Solution

The global cross-border payments system, Swift, has launched an advanced solution for handling payment investigations with the intention of substantially decreasing the duration required to address delayed transactions. This solution is built on ISO 20022 and could be a pivotal example of its broader implementation.

Financial institutions incur annual expenses exceeding $1.6 billion from labor-intensive investigations of delayed payments. According to Swift, this innovative system has the potential to save over $600 million annually and reduce resolution times by up to 80%.

Cross-border payment speeds have improved recently with 90% of transactions processed via Swift arriving at destination banks within an hour. However, missing key information in a payment instruction can prolong the resolution process for five to ten working days. Over the past five years, the average time required to complete a single investigation has remained constant at 200 hours.

Utilization of New Standards

Swift’s new solution streamlines the investigation procedure by utilizing ISO 20022 data, enhancing transparency and interoperability across networks. ISO 20022 compliant messages provide detailed structured information that is easily understood by all parties involved in a transaction.

This protocol can be employed not only for payments on the Swift network but also for any transactions utilizing UETR, or unique end-to-end transaction reference. The UETR standard offers visibility into a payment’s status and location at every stage of the transaction.

A Use Case for ISO 20022

Starting from November, Swift will mandate the use of the ISO 20022 protocol for payments on its network.
ISO 20022 provides a unified standardized framework designed to enhance communication interoperability among financial institutions and their market infrastructures.

Despite its expected benefits in reducing transaction errors, the global adoption of ISO 20022 is being hampered by some financial institutions that have yet to fully appreciate these advantages.

“Many financial institutions might initially view ISO 20022 and think it’s not relevant for them,” commented
James Wester, Co-Head of Payments at Javelin Strategy & Research. “But this attitude could result in higher costs down the line or necessitate their partners to bear these expenses.”