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SWIFT publishes new API standard for fund transfer


The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has published a new API standard for the pre-authorisation of funds. 

SWIFT, which provides a global network of information for its membership of financial institutions, said the standard will enable a payer’s bank to designate funds for a purchase in advance, ensuring that the future payment will go ahead. 

It is the society’s second open banking API standard to be published; its first, the Pay Later API, was launched in January 2019.

In open banking, APIs (application programming interfaces) are used to link banks’ payment systems with third party providers. If every bank uses a different API, SWIFT said, merchants and fintechs would be forced to adapt to various data structures, workflows and security considerations, resulting in increased operational risk and cost. 

Through its global library of API standards, SWIFT aims to tackle this fragmentation. Tony McLaughlin, managing director of treasury and trade solutions at Citi, said: “The SWIFT Pre-Authorization API is further validation that banks, Fintechs and merchants can collaborate to build Open Banking APIs that go beyond the regulatory minimums to support vitally important use-cases. The global banking community must come together to provide the full suite of retail and wholesale banking APIs so that we can provide the financial layer of the digital economy.”

Hiroshi Kawagoe, general manager of the transaction business planning department at Sumitomo Mitsui Banking Corporation, said: “We can already see that each country is developing their own formats and that sometimes individual banks are developing their own formats. This kind of fragmentation may not be ideal as the banking industry progressively opens up more advanced services through APIs.”