Also, the Society for Worldwide Financial Telecommunication (SWIFT) refuted claims that it is partnering with Ripple, Finance Magnate reported.
A few weeks ago, a rumor had it that the interbank payment network SWIFT would collaborate with the San Francisco-based blockchain startup. The rumor also claimed SWIFT would utilize Ripple’s xRapid product to speed up its cross-border payments.
Some also speculated that SWIFT is upgrading its payment system to compete with Ripple’s network. In fact, the company has requested all their users to switch to the new platform known as SWIFT GPI.
This announcement triggered rumors that the new SWIFT’s platform would utilize xRapid and other Ripple’s products. However, SWIFT rubbished the rumors by stating that it is using other means to upgrade their network.
“It is no secret that correspondent banking is a 1998 model and we are busy addressing that, bringing it to a 2018 model,” said SWIFT head of banking Harry Newman, cited by the Financial Times.
Swift is an old international payment system that was created in 1974. The disadvantage is that it is very slow and expensive. Each bank that communicates which each other in the Swift network takes a fee from the customer. The high transaction fees make it almost impossible to send small payments through the system.
However, Ripple offers cross-border payments that are fast, cheap and transparent using a variant of blockchain technology.
Since Ripple payments are virtually instant, their model eliminates liquidity and credit risk from the process, thereby reducing transaction fees significantly. And for this reason, the likes of Western Union, Mercury FX, Currencies Direct and Money Gram which partner with SWIFT sees Ripple blockchain network as a huge threat to the global payment network.
