A former Goldman Sachs executive is behind an effort to take the global money transfer business away from SWIFT, the nerve center of the banking system which routes trillions of dollars a day.
Hank Uberoi, the CEO of Earthport, detailed to Bloomberg his company’s cloud-based payments system which he believes will replace the current setup used to move money from country to country.
“We need to create a FedEx for money,” Uberoi said.
Earthport has assembled a worldwide network that slings money from continent to continent for a fraction of the cost that SWIFT charges, and with less errors.
“It’s ironic that we can send a physical package from one part of the world to another faster, cheaper, and with more transparency than money,” he added.
Banks using SWIFT, the Society for Worldwide Interbank Financial Telecommunication, currently charge upwards of $US50, plus other fees, to send money between countries while incurring an error rate of around 4%.
Earthport plans to charge less than $US5 per transfer, Uberoi told Bloomberg. Errors on the platform happen to only 0.1% of transactions.
The higher rate of errors occur on SWIFT because funds are sent through a series of correspondent banks, there are nearly 11,000 members across six continents, before reaching their final destination.
Earthport has simplified the trip by having the payer bank dump the funds into it’s hub and then firing the money off to the receiving bank without having to involve any other parties.
Uberoi has cut out the middle man — for a small fee, of course.
But these are early days. Earthport earned about $US11 million around the world last year while SWIFT handled $US21 trillion. Earthport’s earnings tripled in the second half of last year, the firm recently announced.
The London-based company also faces competition from China, which recently launched an international payments system referred to by Reuters as a worldwide payments superhighway.