System for Transfer of Financial Messages, SPFS, is an alternative messaging system and a Financial messaging system of the Bank of Russia which handles about a fifth of domestic payments.
The SPFS is the Russian equivalent of SWIFT and was developed by the Central Bank of Russia in 2014 after the United States government threatened to disconnect Russia from the SWIFT system.
While Russia’s SPFS can be three times cheaper than SWIFT, the network itself is only operational during weekday working hours and its messages are limited to 20kb in size. SWIFT, meanwhile, works 24/7 and allows 10Mb to be transmitted across its network.
The first transaction on the SPFS network involving a non-bank enterprise was executed in December 2017. As of March 2018, over Russian 400 institutions (mostly banks) are part of the network.
That means that the SPFS system supports intra-Russian transactions, however the problem with any SWIFT disconnection would be the absence of international connectivity.
In fact, there are plans to integrate the Russian SPFS network with the China-based Cross-Border Inter-Bank Payments System (CBIBPS), while the Russian government is also in talks to expand SPFS to developing countries such as Turkey and Iran.
A Russian disconnect from SWIFT would almost certainly mean Russia would invade Ukraine and gradually bring its economy into the Eurasian Economic Union. With the Ukrainian GDP currently at US$156 billion, it would add another 8% (assuming matters remained stable) to the Russian economy.
That compares to combined annual Russian trade with the EU and United States of about US$226 billion. This means that the risk to the EU in terms of lost Russian trade would be more significant, accounting for about 5% of all EU exports.