The global financial network relies on the Belgium-based SWIFT network to manage payments. While the system is the most reliable solution for banking entities around the world, cross-border payments are still a problem with several banks. Average wire transfers can take days instead of minutes, and bank holidays and other events could cause further delays in the network.
However, RippleNet has proved to be an effective solution to manage such payments quickly and effectively. Recently, the blockchain company announced that it is experimenting with its new multi-hop feature with the Siam Commercial Bank (SCB).
Frictionless Payment Settlements Over RippleNet
SCB becomes the first financial institution on RippleNet to test its multi-hop feature, which allows financial entities to settle frictionless payments on behalf of other entities. Multi-hop eliminates the need for a bilateral relationship between institutions and settles payments faster. This means that SCB will now be able to send and receive payments on the Ripple network even if there is no direct or bilateral relationship between entities.
The event becomes more important as regional cross-border payments in ASEAN are very expensive. For instance, when neighboring countries send money to Thailand, they first have to convert it into US dollars and then send the payment across multiple correspondent banks before it gets exchanged into the recipient’s currency. It involves two foreign exchange transactions and numerous entities, which makes the fee extremely high. Additionally, small and medium-sized enterprises (SMEs) have a hard time making low-value payments.
“With multi-hop, financial institutions can connect directly to SCB, which can settle and payout across the region without exchanging currencies multiple times and adding heavy fees. The result is a seamless payments experience into and out of the ASEAN region. For smaller financial institutions which previously did not have the ability to make payments into ASEAN, multi-hop will democratize access to those countries and make payments easier, regardless of payment size or their financial institution’s pool of liquidity.”
Ripple’s Leap Into Prominence
With multi-hop, customers of RippleNet institutions will be able to send money anywhere. The payments will be faster, cheaper, and more transparent. While Ripple has been in the news because of several allegations including SEC statements about cryptocurrencies being qualified as securities, we are now seeing Ripple receive much more positive news. Just this past two weeks we have seen XRP’s price increase by 119%.
Recently, it was reported that RippleNet had reached 40 countries with a potential for $2 billion in remittances. The company sees an opportunity in emerging markets where SMEs are growing continuously and providing employment to people.
RippleNet’s Multi-hop Feature Debuts With Thailand’s SCB was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.