In traditional banking, for there to be a cross-border payment, two banks had to be directly connected on a one-on-one basis. The situation in the Association of South Eastern Asian Nations (ASEAN) was exactly this way up until the Siam Commercial Bank (SCM) – a member of RippleNet – became the first financial institution in the region to explore a new feature on the network known as ‘Multi-hop’. Using this feature, SCM will be able to act as an efficient go-between by receiving and forwarding payment transactions for institutions in the region that are not directly connected.
The team at Ripple goes on to explain the process as follows:
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.
This new feature is particularly efficient given that financial institutions in the region had to first convert their local currency into USD then settle across numerous connecting banks before the funds reached the intended receiving financial institution.
The new efficiency bought about by the ‘Multi-hop’ feature will make payments easier regardless of the size of the payment or the liquidity of the financial institution sending or receiving the funds. This is primarily beneficial for Small to Medium Enterprises (SMEs) who are responsible for 60% – 70% of employment in the developing world which includes countries in ASEAN.
RippleNet Showcased as Sole Payment Solution on Ripple.com
The recently updated Ripple website has showcased RippleNet as the sole payment solution for global banks and remittance service providers. The new website no longer has Ripple’s other products of xCurrent, xVia and xRapid.
Some XRP fans have postulated that RippleNet is the famous ‘Convergence’ solution that was to integrate all the above 3 products into one seamless payment solution.
With the Swell event less than 48 hours away, the members of the crypto community are anxious to find out what will be announced during the exciting two day event.
[Image courtesy of Ripple.com]