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Modernising global trade finance practices

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The partnership between the ICC and SWIFT will revolutionise global trade finance practices by establishing paperless inter-bank practices and by leveraging electronic transaction data available from dematerialised business-to-business processes. As annualised trade growth is expected to accelerate after 2015, the need for modern trade finance practices based on electronic data flows becomes unquestionable. There has never been an equivalent instrument to enable an exporter to trade on open account terms with the same degree of confidence as a payment that will be executed in accordance with the terms of a letter of credit. Both the ICC and SWIFT believe that, by working together and leveraging their respective positions in the trade finance community, the Bank Payment Obligation rules (BPO) will have an important role to play in supporting the development of international trade in the 21st century and in addressing cost pressures in the face of increased automation and changes in the regulatory environment. The time has now come for banks to prepare for this innovation and start extending their supply-chain finance services from invoice-based processing services (eg e-invoicing, factoring and reverse factoring) to BPO-based services such as payment assurance, pre-shipment and post-shipment finance.
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Keywords: ICC; ISO20022; bank payment obligation; payments; supply-chain finance; trade finance

Document Type: Research Article

Publication date: January 1, 2012

More about this publication?
  • Journal of Payments Strategy & Systems publishes peer-reviewed articles and case studies analysing best practice, emerging issues and new thinking in how to develop a profitable, customer-focused payments strategy. It examines major issues facing the corporate, wholesale and retail payments industry from a business, risk and operational perspective.

    Edited by renowned payments expert Alec Nacamuli and guided by an eminent Editorial Board, each quarterly 100-page issue provides practical, detailed analysis of developments and trends in the payments business, regulation, new entrants and technologies and how to bring them all together to define your payments strategy, as well as actionable advice and ‘lessons learned’ from fellow professionals on how payment processing systems can be leveraged to maximise profitability, security and efficiency and minimise risk. It contains no advertising and no advertorial.

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