"That's it, game over!" That was the response from one transaction banker in Singapore upon hearing of the alliance between SWIFT, the international funds transfer messaging system, and Identrus, which provides legally binding digital signatures for companies in e-commerce.
The initiative is particularly significant because 3,000 banks in some 190 countries own SWIFT.
"SWIFT, through this business alliance they have set up with Identrus, are, in no uncertain terms, going to compete in electronic and internet commerce," comments the transaction banker who declined to be named. "They have messaging expertise and a critical mass in customer banks. Now with Identrus's certification technology and heavyweight backing, it means that startup business models with the similar ideas such as VCHEQ in Singapore, are frankly, toast."
The Identrus digital certificate, which will enable financial institutions to authenticate the identity of companies sending payment instructions over the internet, will be supported by SWIFT's new internet based messaging network, InterAct.
SWIFT chief executive Leonard Schrank says although customer banks are not obliged to use or accept this new network, they expect InterAct will be popular because of the speed at which transactions can be completed with, importantly, security. Digital certificates aim to provide a guaranteed identity of the user, and a guaranteed log and time of the event.
SWIFT will continue an existing network used by the 3,000 banks, but has developed this new technology in response to demand from business-to-business (B2B) merchants who transact over the internet. SWIFT aims to sell this new settlement architecture to banks to support these e-merchant customers.
Currently, due to the proliferation of bank proprietary systems, and fragmented national initiatives by banks and regulatory authorities, cross border online payment solutions for B2B e-commerce offered by banks today are weak. InterAct proposes to provide messaging for existing and new payments schemes for member banks, develop a set of message standards including invoice and payment instructions and information on the execution status of the payment.
InterAct aims to be an open system, which means that it will support a variety of digital certification schemes, including SWIFT's own TrustAct.
"Between SWIFT and Identrus, they will have an infrastructure that no one else has," says the transaction banker. "This will allow banks to build value-added solutions on top of that and start a new era of competition."
Eight third-party companies have already agreed to support the new system. They are Unisys, Global Commerce Systems, PWC Be Trustit, Verisign (US), Secom, Mitsubishi Electric of Japan, TC Trust of Germany and Baltimore Technology of the UK.
