SWIFT is running a test pilot on a new cross border payment system to keep up with blockchain companies like Ripple.
According to a post published by Financial Times, Swift is making a lot of progress to counter the rapid rise of Ripple and other similar blockchain payment startups.
Swift’s goal with the new new system would be to minimize delays and errors on the network.
The way it works
The system utilizes an Application Programming Interface (API) instead of the blockchain.
API allows banks to access each other’s data to verify account info before payments. The company’s latest move is meant to shut down critics who have been accusing Swift of being expensive, slow and prone to error.
Swift has confirmed that 15 banks including J.P Morgan are taking part in the pilot program. In his own words, chief marketing officer at Swift Luc Meurant said:
“We know that there are still some payments which are badly formatted and missing some information. Instead of correcting that later in the chain and delaying payment, we are trying to anticipate as many of those issues as possible (with pre-validation) so payments can be processed faster.”
While J.P. Morgan is one of the participants of the Swift pilot program, the American banking giant is currently working on its own blockchain-based cross-border payment system dubbed “the Interbank Information Network (IIN).” The service offered by the firm has been expanded to more than 100 banks.
Even though the technology behind blockchain payment is proven to be quicker, most big companies and banks will still use SWIFT as it is stable and reliable from it’s many years of history.
As we see more and more partnerships happen with Ripple, we might see bigger companies implement XRP’s technology.