Blockchain or distributed ledger technology (DLT) has yet to achieve widespread use, but it is mature enough to begin commercial use. Ripple, a DLT technology provider, believes the time is ripe for banks to work together to initiate a network for more efficient inter-bank and cross-border payments, according to a white paper [PDF] by Ripple and Accenture.
The paper, titled, “The Journey to Real-Time Cross Border Commercial Payments using Distributed Ledger Technology,” noted that more than 600 alternative distributed networks have emerged since bitcoin began in 2009, including Ripple , which came in 2012. Nevertheless, there is no widespread use of DLT in inter-bank commercial payments, an area with great opportunity.
Numerous banks have tested the technology, but not many have used it to support customer business. Ripple Seizes An Opportunity
Ripple has focused on inter-bank commercial payments and cross-border transfers since these payments usually use a network of banks without a central clearing house or authority. DLT brings an opportunity to make improvements over existing systems.
Cross-border payments currently have certain restraints. They usualy take more than a day and are restricted to business hours. At the point of initiation, the exchange rate and transaction fees can be unknown. The funds can move through many banks before reaching their destination, oftentimes incurring delays and additional fees. Customers often experience delays, high costs and uncertainties in managing these payments.
Banks have to allocate resources to manage liquidity and transactions, respond to inquiries, repair payment details, track status and fix errors.
Ripple, in contrast, offers a real-time, 24/7, synchronous, transparent and information rich transactions. Payments are immediate with real-time confirmation, certainty, and transparency of rates and fees prior to the transaction.
The Ripple solution joins payment messaging with fund settlement, which has proven itself with domestic payment schemes and card systems like MasterCard and Visa. […]
