SWIFT meeting price targets

One corner of the banking industry making strides to cut costs is SWIFT, the international banking cooperative that provides messaging services for many bank transfers.

SWIFT this month announced plans to cut the price on its most common messages by 20 per cent. The lower prices will apply from early 2011.

The unit price of messages, which varies by customer, has dropped by more than 80 per cent since the organisation began to take its costs much more seriously in the mid 1990s. Various five-year plans have delivered targeted cost reductions of up to 50 per cent, including the plan agreed in 2006 and realised early.

The latest price cut is the first instalment in a plan for the next five years that aims to reduce prices by between 30 per cent and 50 per cent.

Steady increases in transaction volumes helps secure the lower prices, with average daily traffic across SWIFT's networks now around 15 million messages per day, and more than five times the level in 1996.

Lower prices for the mere transfer of financial data do not readily contribute lower costs for customers.

The unit price of a SWIFT message to an Australian bank initiating an international payment is in a range from eight cents to 12 cents.

Banks often charge their customers fees in a range from $20 to $35 for these payments, and in many instances the receiver of the payment pays a corresponding fee.