IBM recently introduced its new payment system Blockchain World Wire aimed at clearing and settling cross-border transactions in ‘near real-time’. The potential competitor to Ripple’s xRapid utilizes the Stellar protocol to convert fiat currencies into digital assets for transmission across the network.
The new financial rail works when the two transacting parties mutually agree to use a stable coin, a central bank digital currency or other digital assets as the bridge asset between any two fiat currencies. The digital asset then facilitates the trade and supplies important settlement instructions. Using their existing payments systems, which are connected to World Wire’s APIs, the institutions convert their first fiat currency into the digital asset. For the completion of the transaction, World Wire then simultaneously converts the digital asset into the second fiat currency. And the details of all the transactions are recorded onto an immutable blockchain for clearing.
Source: public.dhe.ibm.com
The system is looking to scrape away the old methods of complex banking intermediaries and traditional international payments systems which increases the cost and time of the transactions.
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With IBM Blockchain World Wire, clearing and settlement with finality happens in near real-time. The solution uses digital assets to settle transactions — serving as an agreed-upon store of value exchanged between parties — as well as integrating payment instruction messages. It all means funds can now be transferred at a fraction of the cost and time of traditional correspondent banking.", the
IBM explains.
Source: public.dhe.ibm.com
The new product will allow the exchange of fiat currencies to cryptocurrencies like Stellar’s Lumens (XLM). It will also be competing with companies like Ripple, who already offer similar products such as xCurrent and xRapid, and have an increasing usage globally.
"What we really want to do is enable all sorts of digital transactional networks to settle their transactions with digital fiat currency on the same blockchain networks. What's happening is there's this emergence of a new segment that could actually be one of the biggest segments, that is a permissioned but public blockchain network typology.”, said Jesse Lund, IBM's Head of Blockchain Services for Financial Institutions to a popular news website.
While the new service offering will be trying to revolutionize cross-border payments, it’ll be interesting to see how it competes with the players in the market who are already up and running. For more information, you can check out the
World Wire page on IBM website.