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SWIFT and the New Payments Platform

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SWIFT and the New Payments Platform

SWIFT and the New Payments Platform

About SWIFT CHESS replacement project. It’s clear faster payment outcomes and the
that SWIFT is a trusted partner to the overlay services framework will provide
SWIFT is a member-owned cooperative Australian financial services industry. new value to Australian consumers and
that provides the communications businesses.
platform, products and services to Every day, institutions in Australia
connect more than 10,500 banks, safely and securely send and receive NPP Solution Overview
securities institutions and corporate approximately 700,000 individual and The “Basic Infrastructure” elements of
customers in 215 countries and many more bulk transactions through the NPP include the Network, Switch
territories. SWIFT has supported the the SWIFT network. In total, almost and Addressing Database. SWIFT will
payments evolution of payments 200 million messages were sent and build, deliver and support the Network
systems around the world for more received in 2013 in Australia, ranking and Switch components and we have
than 40 years and began serving the 11th on the global SWIFT Countries list. sub-contracted Fiserv for the build,
high value Real Time Gross Settlement Reflecting Australia’s significance to the delivery and support of the Addressing
(RTGS) segment in the 1990s, and global SWIFT community, Australia has a Database component.
shortly after, low value/bulk payment seat on the SWIFT board of directors.
Direct Participants, Overlay Services
systems. and the RBA Fast Settlement Service
SWIFT now serves over 180 payment will all connect directly to the Basic
and securities systems globally,
SWIFT and the New Infrastructure. Existing SWIFT users
including critical payment and securities Payments Platform will be able to re-use their SWIFT
market infrastructures such as the SWIFT is delighted to have been connectivity packs if they choose to
Single Euro Payments Area (SEPA), selected as the vendor for Australia’s do so. NPP also caters for Indirect
Continuous Linked Settlement (CLS), New Payments Platform (NPP). With Participants who will rely on agency
TARGET2-Securities (T2S) and the NPP, we will take a new journey with the services provided by a Direct Participant.
SWIFT India Domestic Services. SWIFT Australian community. As the industry- A new entity “NPP Australia Limited”
members benefit from a secure, reliable owned, not for profit cooperative, we has been established by Australian
and standardised connection to reach approach opportunities such as NPP Payments Clearing Association (APCA)
their Financial Institution, Corporate and differently. We do not seek to maximise to govern the system and it is this entity
Market Infrastructure counterparts. profit but to the contrary, we remove that SWIFT has contracted with for the
cost from our owners by allowing them delivery and ongoing support of the NPP
to reinvest in the products, services and solution.
SWIFT in Australia capabilities that they have already spent SWIFT will provide the “backbone” for
Australia has always been a great many years supporting. This approach the secure and reliable movement of
supporter of the SWIFT cooperative. has allowed us to work with the industry messages between ADI Participants and
Originally, the Australian banks adopted to define a model that, we believe, will initiate the Settlement instructions
SWIFT for their cross border payments reaches the correct balance between with the RBA. The Addressing Database
and since then the banking community meeting the aims of the system, whilst will provide the Participants with the
have relied increasingly on SWIFT as keeping complexity and therefore cost, ability to direct payments to recipients
the secure backbone for the domestic to a minimum. using a simple easy to remember
economy. Australia was one of the first Through collaboration with the Australian identifier, such as a mobile phone
countries to adopt the SWIFT model for payments industry and by showing number. A user of the system will no
RTGS systems, which has served the flexibility during the tender process, longer need to know the BSB and
Australian industry for close to 20 years, SWIFT were able to put together a Account Number of the Payee.
and the Direct Entry bulk clearing and unique and innovative model that fits
settlement system also has a SWIFT with the requirements defined by the
option that is used by some of the tier 1 NPP working groups. SWIFT believe
clearing banks. Domestic Securities are this Australian innovation will provide
also settled securely via SWIFT through a case study for the rest of the world,
the connection with the Austraclear and will drive innovation in the Australian
depository and the ASX have indicated payments industry for many years into
their interest to move towards ISO20022 the future. Richer data supplied through
and SWIFT connectivity for their the ISO20022 standard, 24/7 banking,
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SWIFT and the New Payments Platform

The following diagram and descriptions provide a high level view of the technical solution:

Overlays
Addressing (Value Added Services)
SWIFT interface SWIFT interface

SWIFT interface

SWIFT interface
SWIFT NPP
Sending Bank A Messaging Bank B Receiving
Customer Service Customer

SWIFT interface

Reserve Bank Settlement


Figure 1: A high level overview of SWIFT’s solution for the New Payments Platform

The diagram shows the high level • Payment Gateway, a SWIFT • Overlay Services will use the NPP
topology of the distributed ‘Lite’ hub interface deployed to each NPP payment infrastructure. These may
that SWIFT will build for NPP Australia. participant, that will orchestrate include services such as mobile-
Broadly, it consists of a Domestic clearing and settlement flows to-mobile payments, bill payments
Messaging Channel supported between the participating banks and and property settlement services.
by SWIFT’s established network the RBA, and potentially additional The Overlay Services framework will
partners in Australia, an Addressing flows such as payment initiations ensure that the NPP can evolve and
database to provide proxy identifiers that are entered into the system change to facilitate future payments
for ADI customers, and a common by directly connected value added innovations as well as new entrants.
software interface that will manage services (known as overlay services).
• Round the Clock Support will be
the communication flows between provided by SWIFT on a 24/7 basis
• Addressing Database to facilitate
participants, the Addressing database to the institutions participating in the
simpler and more efficient addressing
and Overlay service providers. scheme.
of payments, by linking short names
The distributed nature of the Switch is (aliases), email addresses, mobile
a real innovation and something that phone numbers and other identifiers
distinguishes the Australian solution with the account numbers of ADI Looking forward
from those adopted in other markets. customers.
The fast payments trend is beginning
It removes the need for a heavy central
• Messaging Standards ISO to have a profound impact on the
infrastructure and allows the ADIs to
20022 will be utilised to provide payments ecosystem. The Australian
continue to focus on innovation and
XML-based messaging standards industry’s decision to develop the
differentiation through their customer-
across the solution. ISO 20022 is an innovative NPP system is a very
facing channels whilst utilising a simple,
international messaging development significant step in shaping the future
reliable, fast and secure system to
standard that is designed to simplify of the payments industry, not just in
switch payments between counterpart
global financial communication. ISO Australia but also for the global financial
ADIs.
20022 messages allow flexibility community.
Key Features: and extensibility and can carry
SWIFT believe that this innovation
• Domestic messaging channel additional remittance information
is going to provide a case study for
(DM Channel) which uses local with the payment. SWIFT built many
the rest of the world, and this trend
network access points to switch of the ISO20022 standards and is
represents the future of payments.
payments between the participating the Registration Authority for the
The Australian industry can expect to
banks and the RBA. The DM Channel standard.
benefit from cost savings by reusing
is a point to point messaging solution infrastructure, the trust, reputation and
allowing participants to exchange a experience of SWIFT as a provider of
high volume of messages in-country, critical financial market infrastructure
with low latency on a 24x7 basis. services, and reliable, proven and secure
The distributed nature of the Switch messaging services.
means that there is no single point of
failure in the system.
For more information about SWIFT
visit swift.com

NOV 2014
SWIFT © 2014