SWIFT has published a new API standard for the Pre-authorisation of funds, paving the way for further innovation in financial services enabled by Open Banking.
The new standard allows a payer’s bank to earmark funds for a purchase in advance, guaranteeing that the future payment will be honoured. It is the second of SWIFT’s Open Banking Extensions API standards, and is the latest addition to a global library of APIs that SWIFT is building in collaboration with banks, merchants and fintechs. SWIFT published a Pay Later API standard earlier this year.
API standards play an important role in open banking because they help speed the rollout of new services while reducing incremental investment. If each bank offers a distinct API, merchants and fintechs have to adapt to different data structures, workflows and security considerations for each one – adding complexity, cost and time for implementation. SWIFT has long been at the forefront of banking standardisation and is well suited to lend its expertise and experience to this work in APIs.
The new Pre-authorisation standard is now available for developers of APIs to adopt and use.
As Hiroshi Kawagoe, General Manager, Transaction Business Planning Department, Sumitomo Mitsui Banking Corporation says, “we can 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.”