SWIFT is to cut its message tariffs, as part of its Pricing Challenge to reduce prices by 50% between 2002 and 2006. As always, though, the reduction comes as part of a fairly complicated package that will make it hard for users to work out their own savings.
There are four components: an overall 8% price reduction on FIN; a revised Traffic Growth Incentive Programme; a one-time waiver of licence fees for the SWIFTAlliance Starter Set; and a new “Member/Concentrator model.”
From 1 July 2005, SWIFT will lower SWIFTNet FIN prices for the fourth consecutive year. Prices will be cut on average by 8%. These reductions include a 30% reduction on intra-bank reporting messages; 20% on all other reporting messages; 18% on intra-bank non-reporting messages; 7% on international non-reporting messages and 5% on domestic non-reporting messages. SWIFT projects a total price reduction for its users of approximately Euros 14.3 million in 2005 and Euros 31.5 million in 2006.
“After three years of rebates, SWIFT is having another great year,” boasts SWIFT CEO Leonard H. Schrank. “That’s why we are taking the initiative now to announce significant structural price reductions that will benefit the entire community for years to come.”
In addition to its traditional global tier-based volume incentives, SWIFT is now also introducing “strategic commitment discounts” as an incentive for large users to move from proprietary systems to SWIFTNet. There will be additional price reductions for users committing to increase their SWIFTNet traffic. Users committing to spend 20% more money on their network-based invoices for the next two years can spend up to 40% more, without paying more than the committed amount.
Thirdly, SWIFT is waiving the licence fee of its SWIFTAlliance Starter Set interface software (whose list price is US$ 4,750) for SWIFTAlliance Access or Entry users. SWIFT claims three advantages to this special offer. First, the software allows users to access all FileAct and Browse-based SWIFTSolutions. Secondly, it permits access to all Market Infrastructures that use InterAct and FileAct messages, including TARGET2. Thirdly, installing the SWIFTAlliance Starter Set facilitates the transition to SWIFTNet Phase 2, for which this software will be mandatory for Access and Entry users who do not have Gateway. The offer is valid until 30 November 2005. SWIFT estimates savings for users worth approximately Euros 10 million over the years between 2005 and 2008.
“This initiative is intended to lower the total cost of ownership especially for smaller users,” explains Johan Kestens, Head of Marketing, SWIFT. “Large users will benefit indirectly, since more counterparties will be enabled to receive traffic.”
Lastly, SWIFT is launching a new incentive programme to encourage larger members to attract smaller institutions onto SWIFTNet by offering them “unique business services.” Members acting as concentrators – such as NBBH Infomediary and JP Morgan Message Express – can help end users become SWIFT users and handle SWIFT-related business such as ordering and servicing. The technical operation is similar to the SWIFT Service Bureaux which a number of firms already operate. The model applies to members who bring five or more new institutions onto SWIFT. SWIFT says it reduces the total cost of ownership through reduced fees for membership, BIC registration, logical terminals, SWIFTNet Public Key Infrastructure (PKI) – another compulsory investment by SWIFT users, scheduled for completion next year – and shared security officers and additional destinations (in the case of SWIFTAlliance Access users).