19 Sep Ripple signs top-10 bank PNC for instant international payments
Pittsburgh-headquartered PNC Financial Services Group Inc’s treasury management division will use Ripple’s xCurrent technology to provide its business clients with faster international payments.
Traditional international payments can often take banks as long as a week or more to clear payments between international buyers and sellers of products and services.
With the use of xCurrent, PNC will provide its US business clients with nearly instant payments of their invoices from overseas buyers.
xCurrent is not distributed ledger technology
Numerous banks in Europe, Japan, the US, and other markets have tested various Ripple payments solutions in hopes that distributed ledger technology eventually provides faster and perhaps instant international payments in the near future.
Ripple’s xCurrent “is not a distributed ledger” itself, Ripple’s Chief Technology Officer David Schwartz told Reuters in June. xCurrent, uses “bi-directional messaging”, an enterprise software solution that can plug banks into distributed ledgers thereby providing data and transaction security, instant payment tracking and confirmation, and an immutable transaction record.
xCurrent uses an Interledger Protocol (ILP), which enables interoperation between different ledgers and networks. It is designed to fit within a bank’s existing infrastructure, resulting in minimal integration overhead and business disruption.
Schwartz also told Reuters that banks were unlikely to use distributed ledgers for payments for now until the technology is more developed and more widely tested and accepted in the near future.
RippleNet keeps looking for a breakthrough
Ripple has also developed its XRP cryptocurrency which it helps banks will eventually use in the future to make payments on its proprietary RippleNet platform
Not surprisingly, banks are reluctant to use external solutions until they are bulletproof and adopted by a cross-section of financial industry leaders.
Asheesh Birla, Ripple’s senior vice president for product management said PNC Bank will not be using XRP and xRapid. “Banks aren’t going to be the first adopters of xRapid,” he told Reuters, adding that xRapid was more targeted at emerging rather than US markets.
Ripple blockchain-based solutions can reduce the cost of financial transactions by as much as 60%. Banks may not like the prospect of reduced fees, but businesses will like instant payments and lower costs for sure.
xCurrent is a valuable first step by Ripple in getting banks to use its “interledger” protocol which provides the benefit of instant payments and moves banks towards further experimentation and potential adoption of blockchain banking solutions like RippleNet.