Banks on both sides of the Atlantic have created a high-speed cross-border payments proof-of-concept project headed up by three powerhouses of payment and messaging.

The Immediate Cross-Border payments (IXB) initiative proves that it’s possible to synchronize settlement in one instant payment system, with settlement in another, and to convert real-time messages between both systems, according to a joint release from EBA Clearing, The Clearing House and the Society for Worldwide Interbank Financial Telecommunications (SWIFT).

The goal of IXB is “to make cross-border payments as seamless as the fastest domestic payment options,” the groups stated. Currently, cross-border payments are slow, labor-intensive and expensive.

EBA Clearing connects 4,800 financial institutions and uses RT1, an infrastructure for processing real-time payments (RTP) at a pan-European level. Meanwhile, The Clearing House operates a real-time payment network in the U.S., and SWIFT is a messaging system with 11,000 member institutions.

Eleven banks also contributed to the design of the project, including the French Credit Agricole, Deutsche Bank, ING and Societe Generale. Seven banks participated in the proof of concept: The $3.03 trillion Bank of America, the $2.2 trillion Citi, the $2.98 trillion HSBC, Intesa Sanpaolo Bank, the $2.9 trillion JPMorgan and the $554.2 billion PNC Bank and PNC-owned BBVA.

The banks successfully exchanged payment and confirmation of receipt messages using existing infrastructure, technology and standards, specifically leveraging the ISO 20022 messaging standards, according to the release.

The IXB proof of concept also demonstrated that existing regional instant payment systems could be used for cross-border payments and could provide FIs of all sizes access to a solution for cross-border payments without the need to build a separate network, the release noted.

The project has wider implications, according to Erwin Kulk, head of service development and management at EBA Clearing.

“IXB demonstrates how the current ecosystem of cross-border payments may be enhanced and made suitable for new high-volume 24/7 business,” Kulk said in the release. “In combination with an international request to pay, its potential applications would be limitless.”

Melissa Tuozzolo, head of payments, financial market infrastructures and industry at Citi’s Treasury and Trade Solutions, called the model “key” to economic progress.

“We believe this will help create a highly efficient and streamlined model for Market Infrastructure interlinkage which has the potential to provide end-users with a vastly improved instant, 24/7, real-time cross border payments experience,” Tuozzolo said. “We view this enhancement to the cross-border model as being key to accelerating economic progress and supporting banks, consumers, corporates and the continuously growing e-commerce flows across these economies.”

In August, the Bank for International Settlements (BIS) proposed a cross-border payment blueprint, called “Project Nexus,” that called for linking already available IPS options in order to streamline cross-border payments in near real time. In its proposal, the BIS described the problem as an integration challenge that is relatively simple one-on-one but which grows more complex as the connections scale.

The BIS pointed out the multiple ways in which independent payment systems differ, such as:

• Data formats, standards and mandatory fields;
• Processes and the sequence of steps in a payment process;
• Scheme rules around liability, disputes, data protection and privacy etc; and
• Functionality, such as whether aliases are used and whether there is a confirmation of payee service.

EBA Clearing, SWIFT and The Clearing House plan to take the next steps towards developing IXB to provide a model that can be replicated across other currency corridors and payment systems.