The Clearing House, Swift, Ramp and other payments players are hotly pursuing plans to speed up cross-border payments, and grab a slice of that evolving market.

As payments increasingly move to the digital sphere and pick up real-time speed, companies around the globe are racing to extend faster domestic technologies to the international arena.

New York-based The Clearing House, the bank-owned company operating U.S.-based payments networks, has teamed with the pan-European payment services company EBA Clearing and the international payments messaging firm Swift to jump-start a new cross-border instant payments system. The companies said in an Oct. 5 press release that they’ve completed a proof-of-concept phase of the project and are delving into a pilot that they hope will transition into a commercial enterprise next year.

Their Immediate Cross-Border Payments (IXB) system will allow payments initially just between the U.S. and Europe, but will have the potential to extend to other countries eventually, said Russ Waterhouse, the executive vice president for product development and strategy at The Clearing House. While it’s allowing for payments in 30 seconds or less now, the goal is to reduce that timeframe to 10 seconds or less, he said.

By tapping new real-time payments systems around the world, including The Clearing House’s RTP Network and EBA’s RT1 system, the pilot participants believe they can improve on current cross-border payments by linking faster domestic payments systems that are available 24 hours a day. For now, they’re targeting their efforts at business-to-business payments, as opposed peer-to-peer payments, such as remittances, Waterhouse said.

“We're now very close to actually having a production version where customers in the U.S. can initiate a transaction on RTP and have it land in Europe in Euros on the RT1 system, and be accepted and processed in Europe, end-to-end, in something around 10 seconds,” Waterhouse said in a Friday interview.

Bank participation

There are 12 banks participating in the pilot now, but it’s tapping the “intellectual firepower” of about 25, with all of the banks interested in being part of the commercial rollout next year, Waterhouse said. Transactions consummated in the pilot are real, but the participants are keeping a $25,000 lid on them so as to manage risk in this testing stage, he said.

The companies are revving up their plans just as payments players from around the world gather in Amsterdam starting today for the Sibos financial services conference that will take up topics about “embracing the digital landscape.”

The conference presents an opportunity to discuss the project and the possibility of extending its reach by way of discussions with some the 8,500 conference attendees, Waterhouse said. Eventually, he expects IXB may extend to include the Canadian dollar, the Australian dollar and the British Sterling Pound, among others. All of the countries that have real-time payments systems, which is some 50-plus names, are candidates for collaboration.

IXB isn’t the only cross-border effort underway aimed at improving cross-border payments. The Bank for International Settlements (BIS), which is based in Basel, Switzerland, has a similar project called Nexus in which it has locked arms with the Bank of Italy, the Monetary Authority of Singapore, Central Bank of Malaysia and other entities to link the payment systems of Singapore, Malaysia and the Euro area.

Fintechs like Ramp are also jumping into the ring to solve the issue of slow, complex cross-border payments. That company told Payments Dive last month that it’s seeking to expand in the $120 trillion B2B market by offering clients cross-border services.

CBDC efforts

In a different cross-border payments tack, BIS also has another initiative called Dunbar underway, with that project attempting to tap the technology of governments’ digital assets, known as central bank digital currencies (CBDCs), to bolster cross-border transactions. In this case, BIS is working with Reserve Bank of Australia, Bank Negara Malaysia, Monetary Authority of Singapore and the South African Reserve Bank.

Swift is also pursuing the CBDC approach, eyeing potential benefits of improving cross-border payments with those digital asset channels. Last week, Swift said it’s shown in two separate experiments that it can create such an interoperable, cross-border CBDC payments system by way of distributed ledger technology.

“This important step forward builds on SWIFT’s core capabilities and means that as CBDCs and tokens develop, they can be rapidly deployed at scale to facilitate trade and investment between more than 200 countries and territories around the world,” Swift said in an Oct. 5 blog post.

The CBDC route is not one that The Clearing House is backing, Waterhouse noted. His organization and many financial institutions in the U.S. have taken issue with the technology behind CBDCs, rejecting it as an answer for improving cross-border payments. 

Indeed, The Clearing House last year urged U.S. government officials to proceed with caution in even considering development of a central bank digital currency, saying it could do more harm than good. The Clearing House said in a July 2021 press release that the “introduction of a U.S. CBDC has the potential to destabilize both the domestic and foreign banking and financial services sectors, and to make illicit activity using the U.S. dollar easier.”

As the rivals proceed with their disparate and overlapping strategies for improving cross-border payments, one scheme or another is likely to improve the international system for passing payments sometime soon.