Blockchain for Cross-Border Payments: A Case Study on Ripple

Payments

Apr 12

International fund transfer systems are complex, slow, fragmented, and outdated. The backbone of the financial industry for international transfers is the Society for Worldwide Interbank Financial Telecommunication (SWIFT). SWIFT, which is over fifty years old (SWIFT History, 2025), connects over 11,000 financial institutions in more than 200 countries (SWIFT, 2023). An international transfer typically involves multiple intermediary banks, each requiring a processing fee, currency conversion fee, and additional processing time. Although SWIFT has upgraded its network to speed up transactions, its transfers remain slow, often taking 3-5 days to settle. Around 65% of banks attribute this slowness due to their own legacy systems not the SWIFT network (65% of banks say legacy systems holding back, 2020). The publication of the Bitcoin blockchain paper in 2008 ushered in a new era of financial payment systems, promoting a decentralized approach to processing payments without the need for central authorities like banks. However, the Bitcoin blockchain has limitations: it processes only 7 transactions per second, is energy-intensive, costly, and does not natively support traditional financial systems. In 2011, a group of developers at a company called OpenCoin were inspired by Bitcoin and decided to develop a blockchain specifically designed to support payments (XRPL History, 2025). The blockchain called the XRP Ledger (XRPL), evolved over time, and the company was renamed Ripple. Ripple shifted its focus to building a scalable, profitable business that assists established financial institutions in cross-border payments (XRP: A History, 2022).

Ripple has the highest probability of being the first blockchain to be adopted by traditional financial institutions for the purpose of cross-border payments due to its four core products, which create an ecosystem that bridges blockchain technology and legacy financial systems: Ripple Payments (formerly RippleNet), XRPL, Ripple On-Demand Liquidity (ODL), and Ripple USD (RLUSD).

The first product that makes Ripple a top contender to be adopted by banks is its global payment network Ripple Payments. Ripple Payments enables receiving remittance instantly in more than fifty countries and fifty-five currencies (Ripple Payout Networks, 2025). Ripple already partnered with several leading banks worldwide, including Santander, JPMorgan Chase, and American Express (Are Banks Using XRP?, 2025). As more banks join Ripple Payments network, the adoption of ripple increases, and its benefits will reach more consumers, both individuals and businesses. In addition, Ripple is the first blockchain company to comply with SWIFT’s new messaging standard, ISO 20022 (Muchoki, 2020). ISO 20022 creates a common language and model for payments data, serving as a global standard for financial institutions. By aligning with ISO 20022, Ripple ensures that its payment solution can seamlessly integrate with traditional financial systems.

The second product is the XRP Ledger (XRPL), an open-source, decentralized, peer-to-peer network and a Layer-1 blockchain. XRPL offers scalability, speed, and low cost, making it a highly efficient solution for global payments and asset tokenization. The XRP Ledger can handle 1,500 transactions per second (TPS) on average, with the potential to scale even higher (RLUSD Whitepaper, 2024). This is significantly faster than Bitcoin’s 7 TPS and Ethereum’s 30 TPS. Additionally, XRPL transactions are quickly confirmed, on average in three to five seconds, with transaction fees fixed at $0.0002 per transaction (RLUSD Whitepaper, 2024).

XRPL also focuses on the use case of tokenizing Real-World Assets (RWAs), such as real estate, commodities, and financial instruments. Unlike other blockchains, XRPL allows for the creation of tokens without the need for complex smart contracts or specialized programming languages (Embracing Real World Asset Tokenization, 2024). This simplicity and efficiency make XRPL an attractive platform for institutional investors and financial institutions. For example, the tokenization platform OpenEden has announced it is tokenizing US Treasury bills on XRPL (Arnaldur, 2024). This is the first tokenized US Treasury product to earn an investment-grade ‘A’ rating from Moody’s rating agency, a testament to its credibility and appeal among institutional investors (Unlocking DeFi Potential, 2024). By enabling the tokenization of RWAs, XRPL is positioning itself as a key player in the future of asset management.

The third product is ODL. Ripple’s ODL uses Ripple’s native currency XRP as a bridge currency, facilitating seamless and cost-effective transfers across correspondent banks and financial institutions internationally. In contrast to traditional methods banks rely on pre-funded bank accounts at correspondent banks in other countries known as nostro accounts. The nostro accounts are bank level accounts pre-funded to avoid currency exchange costs in international transfers. ODL eliminates the need for banks to store capital in the pre-funded accounts. This reduces transaction times from days to just seconds and operates 24/7, including weekends and holidays, ensuring an efficient financial flow (Pawlak, 2025). By eliminating the need for pre-funded accounts, ODL reduces costs, increases transparency, and frees up working capital, allowing banks to expand operations and invest in growth opportunities.

The fourth product is RLUSD. Ripple’s stablecoin is redeemable 1:1 in US dollars and designed to maintain a stable price. Stablecoins like RLUSD are critical for bridging the gap between traditional finance and blockchain technology; as they provide the stability of fiat currencies while leveraging the efficiency and transparency of blockchain. RLUSD can be used for cross-border payments, remittances, and as a liquidity tool in both decentralized finance (DeFi) and traditional finance (TradFi) applications.

RLUSD is backed by high-quality, liquid reserves, including cash and short-term US Treasury securities, held in secure, regulated custodial accounts (Ripple USD Whitepaper, 2024). Regular audits and transparency reports ensure that RLUSD maintains its 1:1 peg to the US dollar, fostering trust among users and institutions. Additionally, RLUSD is designed to comply with global regulatory standards, including anti-money laundering (AML) and know-your-customer (KYC) requirements, ensuring its adoption by regulated financial institutions.

In summary, Ripple is one of the few blockchain companies focusing on cross-border transactions. By creating an ecosystem that bridges and evolves traditional financial systems, Ripple is addressing key challenges in cross-border payments, remittances, trade finance, and asset management. Its products Ripple Payments, XRPL, ODL, and RLUSD offer a compelling value proposition for banks and financial institutions, making Ripple a strong contender for widespread adoption in the banking sector. As blockchain technology continues to evolve, Ripple’s ecosystem and strategic partnerships position it as a leader in the future of global finance.