Modern Treasury has presented a new cross-border payment network Global ACH, that should provide a cheaper and faster alternative to the SWIFT network and other third-party options with high FX markups
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Modern Treasury, a fintech provider that builds payment operations software, introduced the Global ACH service enabling users to send cross-border payments leveraging local rails.
Global ACH (International ACH Transfer) is a method for moving money from US-based accounts across borders using local payment rails such as EFT in Canada, SEPA in Europe, BACS in the UK, and BECS in Australia. The company presents its new product as a cost-saving alternative to SWIFT, FX providers, and third-party service providers.
Silicon Valley Bank was among the first to offer its clients the new service, letting them automate international payments using the ACH- and RTP-equivalent payment rails in other countries.
The firm expects the main use cases for Global ACH to be
- marketplaces that pay out users and suppliers in international markets;
- shipping and logistics firms that disburse funds to global vendors and suppliers;
- financial services providers, e.g. payroll and lenders sending funds to international recipients;
- businesses with large bases of international suppliers and contractors;
- software providers offering accounts or payable services for clients across the globe;
- remittance providers.
For many businesses, using payment solutions like Global ACH is less time- and resource-consuming than establishing individual bank accounts abroad. Besides, companies that initiate Global ACH using their US-domiciled account, will not need to bother with cross-border compliance and security, as it is managed by the bank.
At the same time, Modern Treasury mentions the system’s limitations. Namely, Global ACH is for credit (or push) payments only. Besides, payment settlement is slower than the one provided by SWIFT, and there are certain limitations to coverage and support for Global ACH.
