payLOCATOR. Main Concepts. Chapter 2
We continue our story about the main concepts used in IntellectEU’s innovative payment tracking solution — payLOCATOR. Today, product manager and payLOCATOR evangelist Dmytro Diachkovskyi will talk about SWIFT’s initiative for corporations called g4c (gpi for corporates).
G4С — SWIFT gpi in a different way
SWIFT gpi, which we discussed in our previous post, allows banks to take a big step forward in accelerating the flow of cross-border payments. Thanks to gpi Tracker, which utilizes a unique UETR identifier for each payment, it is now possible to monitor the movement of transactions through the network of correspondent banks. However, it is important to remember that behind each payment, there is a client who wants their funds to be processed quickly and on time, as well as be able to receive information about the movement of their funds all the way to the final recipient. Given this need, SWIFT offered corporations connected to the SWIFT network a special version of the gpi service, called g4c (gpi for corporates).
This service possesses similarities to the standard gpi option that banks can use, but there are some significant differences. Corporations do not receive information about their transfers directly from the SWIFT tracker, as banks do, but rather from their servicing bank. This condition imposes a number of restrictions on the companies’ capacity. First, the servicing bank must be a member of the gpi community. Considering that large companies are mainly connected to SWIFT today, and that all major clearing banks in the majority of the world have long been involved with gpi, this condition is unlikely to be a problem for the corporation in their effort to be connected to g4c. The second condition is that the servicing bank must agree for its client to receive a subscription to the g4c service. Giving its consent, the bank must be ready both technically and operationally to send to its client the payment status messages from the SWIFT gpi tracker through the SWIFT network.
If the aforementioned conditions are met, the corporation receives a subscription to the g4c service and begins to receive information about the transaction processing through the correspondent banks network via its servicing bank. This solution allows the bank’s customers to “look behind the scenes” of what is happening in the bank, so that they can know exactly when the payment was sent, when it reached the recipient, what fees were withheld by correspondent banks, and so on.
The main drawback of the g4c service is the complete dependence of the corporation on the servicing bank. The client cannot control the speed of information transmission from the bank, which automatically receives it from the SWIFT gpi tracker. Also, the client cannot check the integrity and accuracy of the data transmitted, since they do not have the ability to verify it with information from the SWIFT network. Perhaps this is one of the reasons why the development of the g4c service significantly lags behind the development of the gpi service. Taking this into account, SWIFT decided to modernize its service and give corporations the opportunity to receive information automatically from the tracker (like banks). However, this can be done only with the prior consent of the servicing bank, which executes the relevant payment. Such modernization is planned for implementation in the near future, but will remain in its current state in the meantime.
Nevertheless, the g4c service represents a positive opportunity for companies connected to the SWIFT network. Now, their task is to learn how to process and understand the information that the bank or, in the future, SWIFT transmits to them. This is where IntellectEU’s payLOCATOR solution comes into the picture as it allows corporates to see the status of their transactions and securely exchange this information with their counterparties, for example, if they need to confirm the timely execution of the payment.
We invite you all to stay tuned for our future articles. Next time, we will talk about another innovation within our payLOCATOR solution — working with messages in ISO 20022 format — an especially important topic given that the entire SWIFT is switching to this format soon.
If you have any other questions, please write them in the comments and we will answer. Also, please feel free to book a demo!
