Currency exchange and remittance network Ripple has stressed the need to overhaul cross-border payments amid a new report that some charities and individuals are getting their cash stuck, thanks to the inefficiency of the centralized bureaucracy.
For over four decades, the majority of cross-border settlements handled by financial institutions have been relying on the Society for Worldwide Interbank Financial Telecommunication (SWIFT). However, a recent report by the Guardian highlights the existing problems with cross-border settlements powered by Swift.
SWIFT transfers which can take anywhere from several hours to days to complete due to paperwork and bureaucracy often creates pain for its customers, even as it makes great profits for participating banks. It is slow, out-dated and expensive. The report gave a real-life example:
“Elaine and Malcolm Thompson’s charity, St Paul’s Children’s Project, pays school fees and expenses for 36 orphans in Zambia. In October they made a payment using the Swift system of £11,000 from the charity’s Barclays account to its designated bank in Zambia, but it never arrived,” the Guardian reports.
“After the Observer intervened, Barclays returned the funds, blaming the beneficiary bank in Zambia for the delays. The acronym Swift (Society of Worldwide Interbank Financial Telecommunications) proved to be a misnomer, as many people have found,” the article continues.
In response to the new report, the global head of strategic accounts at Ripple Marcus Treacher said the need to upgrade a global payment system to create an Internet of Value (IoV) could not be overemphasized.
“If you need a reminder of what @Ripple technology is solving, you need to read today’s new article from the Guardian, ” Marcus tweeted.
The San Francisco blockchain startup has openly criticized Swift several times, particularly since Brad Garlinghouse took over as CEO of the startup from the company’s founder Chris Larsen.
Even so, Swift is making lots of progress to counter the rapid rise of its blockchain-based competitors such as Ripple and TransferWise. On December 7, Theccpress reported that Swift is working on a cross-border payment infrastructure that uses (API) to minimize delays and errors on its network.