Thailand’s Siam Commercial Bank (SCB) is set to be one of the first leading banks in any country worldwide to pioneer Ripple’s new multi-hop payment facility through blockchain.
Ripple is a digital currency and blockchain platform that is now set to allow frictionless payments to any entity further along the blockchain, and SCB will be the first to give it the go-ahead.
According to Ripple, SCB will now be able to: “receive and forward on a payment without a bilateral relationship between the originator and beneficiary institutions”, which means there is no need to set up introductory financial compliance deals between institutions as long as they are set up on the Ripple blockchain and should make financial interactions between worldwide entities much easier to carry out and track.
Sending money abroad has long been an issue for many emerging markets, particularly in the Association of South Eastern Asian Nations (ASEAN) region, where high transactional fees and serious inefficiencies in the financial procedures they face have posed much difficulty in financial trades between these countries. It is hoped participation in the Ripple blockchain will be able to build a bridge across these issues.
At the moment, most countries have to convert their own currency to dollars, and the recipient then has to change dollars back into their local currency in their country. This means both sides face high transaction fees and potentially poor conversion rates at the border, so this mechanism may well alleviate these issues. Performing an exchange rate comparison is a sensible option.
Ripple says that the multi-hop function means these countries can make payments through SCB easily and change currency several times without facing high costs of transaction each time it goes through a different border in the ASEAN area.
Ripple also says there will be increased transparency as a result, and it will help to make the financial supply chain appear clearer. Payments will also be sorted quicker and with lower overall fees.
