The SWIFT network was established in the 1970’s as a transaction messaging service between financial institutions. Although the SWIFT network is heavily used today there are a wide variety of challenges and frictions associated with it. Specifically, for cross-border payments, the industry works on a pre-funding model, with no guarantees of credit time using SWIFT networks.
Money within the SWIFT network sleeps every “red day,” such as weekend, national holidays, outside working hours, and cut-off times. In an age of e-commerce and instant consumer gratification this is becoming increasingly unacceptable. There are around 180 “red days” worldwide in any given calendar year, where the traditional banking system and the SWIFT network are sleeping. Practically this means that CPP’s have to pre-fund for longer periods time and for larger amounts of working capital, taking on more cost, uncertainty, and risk.