Straight-through processing is an automated process with no manual intervention involved, carried out purely through electronic transfers. Its common uses are both in the processing of payments and the processing of securities trades. To facilitate STP efficiency, any company involved with straight-through processing will need to have the necessary systems and technical networking in place.

Generally, in the areas of payments and securities trading, straight-through processing is most well-known. It is, however, a methodology in general that could be implemented in a variety of technical scenarios. The technology for STP is constantly evolving in all areas of STP. Cryptocurrencies and fintech suppliers have introduced much faster types of straight-through processing in payments, especially as bank alternatives.

Straight-through processing is an innovation that has grown alongside computer and computer programming integration. Automated Clearing Houses (ACH networks) began development in the early 1970s. Around this time, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) was also founded.

SWIFT and ACH have significantly upgraded banking payment transfers from an earlier telegraphic system involving a single operator typing Morse code telegraphic transfer orders. ACH was first introduced by the Federal Reserve Bank of San Francisco in the United States, mostly as a payroll direct deposit solution.

Networking between ACH and SWIFT has grown since the 1970s, although these two systems form the main framework for most domestic and global payment transfers. To facilitate electronic STP, any financial service provider who wants to be in the payment processing business will need to link up with a payment processing network.

In general, most of the processing of electronic payments is considered STP. However, in order to alert security specialists, advanced coding within payment networks can be added to flag or stop suspicious transactions.

ACH and SWIFT were groundbreaking introductions that changed banks’ capabilities and also created a wide range of financial technology platform opportunities. The efficiency and speed of payments domestically and globally has been increased by STP itself. STP streamlines the use of payment and routing information so that there is no need to enter the instructions manually.