Major banks partner with Swift to tackle ‘Last Mile’ delays in cross-border payments

The global finance industry is embarking on a pivotal initiative to make sending money internationally as seamless and predictable as a domestic transfer. This effort, spearheaded by Swift and a coalition of over 30 major global banks, targets the notorious “last mile” friction that has long plagued cross-border retail and small business payments.

The central objective (or “infinitive”) of this new Swift scheme is to set a new standard for predictability and transparency in retail cross-border payments. While Swift has already made significant progress in speeding up wholesale transactions—with 75% of payments on its network reaching the beneficiary bank within 10 minutes—the goal is to extend these benefits to billions of consumer and SME accounts worldwide.

The voluntary coalition of banks, including industry heavyweights like Bank of America, Deutsche Bank, JPMorgan Chase, and Banco Santander, are committing to a new set of rules for transactions. These commitments are designed to empower the customer and eliminate historical pain points:

• Upfront Transparency: Banks must provide clear, upfront disclosure of all fees and Foreign Exchange (FX) rates.
• Guaranteed Full-Value: The recipient is guaranteed to receive the full value of the payment without unexpected deductions from hidden intermediary charges.
• End-to-End Visibility: Customers will have complete tracking visibility of their transaction from the moment it is initiated.
• Instant Settlement: Payments will be committed to instant settlement wherever the domestic infrastructure and regulations of the receiving country permit.

This concerted effort aligns directly with the ambitious G20 Roadmap for Enhancing Cross-Border Payments, which seeks to achieve global targets for speed, cost, accessibility, and transparency by the end of 2027.

The sheer scale of this challenge becomes clear when looking at payment processing data. Swift’s own research highlights that the long delays associated with cross-border payments do not primarily occur during the international leg.

Analytically, the “in-flight” cross-border portion—the time the payment is moving between the sending and receiving banks on the Swift network—accounts for only about 20% of the total transaction time.

The overwhelming majority of the friction—a full 80% of the delay—occurs during the “last mile,” the domestic leg of the transaction after the payment has reached the beneficiary bank.

This final, crucial stage is slowed down by a complex web of local limitations that a global network like Swift cannot solve alone. The root causes of the last mile delay include:

• Domestic Infrastructure Constraints: Many countries lack 24/7 real-time gross settlement (RTGS) or instant payment systems, leading to transactions being held for overnight batch processing or non-business hours.
• Varying Regulatory Hurdles: Differences in national regulatory frameworks create friction. Specifically, requirements for local regulatory reporting, such as “purpose-of-payment” reporting for balance of payments statistics, can halt a transaction.
• Local Market Practices: Routine banking procedures, such as needing to confirm with customers before crediting their accounts, or manual processing steps, can prevent straight-through processing and introduce delays.

By implementing the new scheme, Swift and its partners are shifting their focus from optimizing the international leg (which is largely solved) to addressing these domestic processing limitations. This industry-wide effort to standardize practices and leverage new technologies, such as the adoption of the richer ISO 20022 messaging standard, is the necessary path to ensure the payment data required for compliance and final settlement moves as efficiently as the value itself.

Ultimately, the partnership between major banks and Swift is a recognition that achieving truly instant global payments requires a collective commitment to harmonizing local practices with global speed, finally bridging the last mile to fulfill the G20’s vision.