Solution Overview
One frictionless experience to
send money globally
Across a connected network of financial
institutions and payment providers
4 Payment Networks Today
6 RippleNet
12 Ripple For Banks
16 Key Benefits
20 Rulebook And Governance
22 Compliance
26 Security
28 About Ripple
29 Contact Us
2 3
Payment Networks Today
A Fragmented System Of Siloed Networks
Today’s global payments system is neither global or a system. A system,
SLOW
defined as a set of connected things forming a complex whole, does 3-5 days to settle
not describe the currently siloed payments networks that lack effective
inter-connectivity to deliver on the demands of today’s customers. As for
its global reach, due to the high costs and inefficiencies of cross-border
payments, many banks, businesses and consumers are shut out of the
current system. EXPENSIVE
$1.6 trillion in
The litany of pain points -- low speed, limited transparency and
annual costs*
high cost -- from the current system stem from the lack of a single,
global payments network. The fragmentation of existing networks
has significant downstream impact; primarily, it results in a marginal
experience for all parties involved in cross-border payments. Without UNRELIABLE
direct connectivity between transacting parties, factors such as traceability
and timing are a black box to sending and receiving banks, businesses 4%+ of payments fail*
and consumers.
Because of the high processing costs from one network to the next that
are passed down to end users, it limits banks’ addressable market and
impacts their servicing capabilities. The lack of standardization across UNACCEPTABLE
networks impacts functionalities such as data transfer -- making it
End users demand a seamless
unreliable for end users to send critical information with their transaction.
and elegant experience
The result is driving businesses and consumers from banks to FinTech
providers that can more adequately meet their needs.
*McKinsey, Global Payments Industry Study, 2016
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RippleNet
One Connected Global Payments Network
RippleNet delivers a single, frictionless experience for global payments. SPEED
Rather than a constellation of disparate technologies, unstandardized Instant, on-demand
communications and centralized networks, RippleNet is a single, global settlement
network of banks that send and receive payments via Ripple’s distributed
financial technology -- providing real-time messaging, clearing and
settlement of transactions. COST
Low operational and
RippleNet is a decentralized network based on an agreement between liquidity costs
Ripple and network participants -- all of which utilize the same technology
and adhere to a consistent set of payment rules and standards. CERTAINTY
Trackable payments
RippleNet banks benefit from the robust connectivity, standardized
with settlement
technology and rich data attachments with each payment. Ripple’s
certainty
distributed financial technology outperforms today’s infrastructure by
driving down costs, increasing processing speeds and delivering end-to-
end visibility into payment fees, timing and delivery.
ACCESS
Single point of access
to a global network
6 7
RippleNet Participants
The ecosystem of RippleNet participants is categorized into two key groups: network members
(banks and payment providers) and network users (corporates, consumers and others).
Network Members: Enablers Of RippleNet Network Users: Originators Of RippleNet
Banks looking to process Platform businesses looking to
payments for corporates and send disbursements of high
consumers. Some would also volume and low value to a global
process payments for and provide base of suppliers, merchants
liquidity to other banks. These and employees.
banks would leverage RippleNet to
enhance their servicing to existing Corporate treasury departments
customers and drive acquisition. looking to send large disbursements
across their global supply chain
Payment providers looking to to gain greater capital efficiency,
supply liquidity and expand payout visibility and control.
reach for banks to increase their
payment volumes. Banks and payment providers
looking to only send payments,
rather than process them, to
overcome the high costs and
inefficiencies of correspondent
banking.
Consumers looking to send
global payments through their
xCurrent
bank or payment provider for
Ripple’s software that provides API-based
a cost-efficient, real-time and
messaging and transaction settlement based
traceable option.
on an open, neutral protocol of value transfer
between different ledgers and networks.
8 9
Ripple For Banks
State Of Banking Payments: Inefficient, Batch Infrastructure Ripple: Efficient, On-demand Payment Infrastructure
The needs of today’s corporate and retail Transaction Banking customers Ripple’s software connects these siloed networks through an open, neutral
have evolved significantly. In addition to sending high value payments, they protocol -- Interledger Protocol (ILP) -- that brings new efficiency to financial
require the ability to send international low value payments on demand and settlement by enabling real-time settlement, ensuring transaction certainty
in real time -- not only across banking networks but also emerging financial and removing settlement risk. Ripple’s software also includes data-rich
networks (e.g., mobile wallets). The limitations of today’s infrastructure messaging between all transacting parties -- delivering a real-time payment
force banks to process payments in batch, resulting in high processing experience to end users.
costs, lengthy settlement times and a poor customer experience. These
inefficiencies not only result in an enormous cost (an estimated $1.6T* per
year for all participants in the ecosystem), but also fail to meet the needs of
today’s banking customer.
MON TUE WED
20 21 22
Low-Volume High-Value Slow Batch Payments High-Volume Low-Value Real-Time Individual Payments
10 11
xCurrent
Ripple’s software, xCurrent, enables banks to differentiate themselves by
offering new cross-border payments services while lowering their total
cost of settlement. The solution is specifically designed to meet the needs
of banks by fitting within their existing risk, compliance and information
security frameworks. Ripple’s software is installed within the bank’s
infrastructure and is built to interface with the bank’s systems using an
API interface or through a translation layer that can consume traditional
payment message formats to compress the integration time frame
into weeks.
All members of RippleNet are connected through Ripple’s standardized
technology, xCurrent. xCurrent is the first global real-time gross settlement
(RTGS) system that enables banks to message, clear and settle their
transactions with increased speed, transparency and efficiency across
RippleNet’s global footprint of banks and payment providers.
The solution is built around ILP, an open, neutral protocol, that enables
interoperation between different ledgers and payments networks. The
solution offers a cryptographically secure, end-to-end payment flow with
transaction immutability and information redundancy. It is designed
to comply with each bank’s risk, privacy and compliance requirements.
Because the software is architected to fit within banks’ existing
infrastructure, it minimizes integration overhead and business disruption.
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Solution Components
Messenger Validator
Messenger is an API-based messaging module Validator is a component that
that enables bidirectional communication cryptographically confirms the success or
between connected RippleNet banks. It failure of a payment. It coordinates the funds
connects to the beneficiary bank’s instance movement across the ledgers of transacting Bank A Bank B
of Messenger to exchange KYC and risk parties in a way that removes all settlement (Providing liquidity)
information, fees, FX rates (if applicable), risk and minimizes delays in settlement.
payment details and expected time of funds Validator provides the single source of truth
delivery. It packages this information and for the transacting counterparties regarding xCurrent xCurrent
presents the entire cost structure to the the success or failure of a payment.
originating bank, providing unprecedented
visibility into the total cost of the transaction.
If information is incorrect or missing, transacting ILP
ILP Ledger Messenger
Bidirectional Messaging
Messenger
parties will find out before initiating the
transaction, drastically increasing straight- ILP Ledger is a subledger of each transacting
through processing (STP) rates. Once the bank’s general ledger. This component of
sender approves the transaction, Messenger xCurrent is utilized to the track the credits, ILP ILP
employs ILP to settle funds and notifies all debits and liquidity across the transacting ILP Ledger ILP Ledger
parties of the transaction confirmation. parties. ILP Ledger enables transacting parties
to settle funds atomically, which means the
entire transaction settles instantly or not at all
FX Ticker
-- no matter how many parties are involved.
FX Ticker
FX Ticker is the component of xCurrent that
The ability to atomically settle enables new,
facilitates the exchange between ledgers by Real-time Settlement Real-time Settlement
low-value offerings through the ability to
enabling liquidity providers to post FX rates. Validator
send real-time payments as the settlement
This component provides the exchange
of funds happens in milliseconds. Further,
rate between any pair of ledgers that it is
the settlement risk is eliminated because the
configured with. Additionally, it keeps track
payment processes entirely or fails upfront.
of the account, currency and authentication
ILP Ledger is designed to provide transacting
credentials for each configured ILP Ledger.
banks with 24/7, on-demand availability. The
During the transaction, it coordinates transfers
combination of these capabilities allows banks
on ILP Ledgers for settlement, ensures the
to profitably offer low-value, on-demand
validity of an FX quote and transfers the
international payments products and services.
payment amount to the beneficiary bank’s
ILP Ledger.
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Key Benefits
Enhance Customer Acquisition And Retention Estimated Total Cost Per Payment
$5.56
By delivering new products and services to retail and corporate
Payment processing
customers -- featuring high-speed, on-demand, cost-effective and
$3.70
traceable global payments -- in both assisted and unassisted channels,
it provides an opportunity re-engage and retain existing customers.
xCurrent’s frictionless payment experience mitigates disintermediation
from online, non-bank payment providers. The solution is a key
competitive advantage and promotion-worthy offering to drive
customer acquisition.
-60%
Lower Operational Costs
$2.21
With xCurrent’s bidirectional messaging, banks can more efficiently
exchange information regarding the sender, receiver, fees, rates,
Payment processing
delivery estimate and payment status to lower their operational cost $0.69
Treasury
of processing international payments. Payment processing costs are $0.48
significantly reduced through xCurrent’s ability to increase STP rates Treasury
Reconciliation $0.36
and eliminate SWIFT fees. Treasury operations costs are decreased by
$0.38
lowering in-flight capital requirements, liquidity costs, counterparty risk Reconciliation
$0.16
and compliance costs. Reconciliation costs are reduced due to xCurrent’s
ability to provide instant confirmation and real-time liquidity monitoring.
Receiving Fees Receiving Fees
$1.00 $1.00
TODAY RIPPLE
Note: Modeled use-case: Annual Payment Volume: $100M; Number of Annual Payments: 200K; Average
Payment Size: $500; Corridor: CADUSD
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RippleNet Rulebook And
Governance
Rulebook
The value of RippleNet derives from its combination of key elements:
standardized and powerful technology; a global network of banks
and payment providers; a consistent set of rules and standards and a The objective of the Rulebook is to create a legal framework that ensures
governance structure comprised of an advisory board of industry leaders. optimal working relationships with all network participants and a seamless
To join RippleNet, both members and users sign an agreement with experience for the end user. The Rulebook provides detailed information
Ripple and follow the rules and standards as outlined in the Rulebook, regarding the rights and obligations of network participants, business
which eliminates the need for inefficient bilateral agreements. and operational rules and the process for changes to the Rulebook. It
also offers in-depth technical standards regarding the end-to-end
transaction flow and defines the service-level agreement between
transacting parties. In essence, the Rulebook creates consistency
COMMON PAYMENT R ULES A ND STA NDA R DS
across RippleNet by providing operational certainty and legal
clarity for every transaction.
RippleNet Advisory Board And Governance
COMMON PAYMENT RULES AND STANDARDS
Ripple actively consults its advisory board which includes industry
leaders from Transaction Banking, Digital Services and Cash Management.
Regarding the Rulebook, the advisory board provides governance to
RippleNet Bank consistently ensure that the rules and standards are in close alignment
with the exact needs of today’s banks and their customers.
Liquidity Relationship
RippleNet Bank
Liquidity Relationship
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Compliance
Ripple As A Software Provider
Ripple provides licensed software and integration services that enable clients
to facilitate real-time payments. A bank's use of xCurrent may be subject to
a regulator’s oversight, approval and examination, depending on the rules of
each country.
The regulatory treatment of xCurrent is dependent on several factors, such as:
• The type client being serviced (including its type of license, charter and
designation)
• Country of integration and geographic scope of operations
• Volume and scope of activity enabled through the software provided
• Level of dependency on the software provided Data Privacy And Protection
• Other factors determined by the bank or regulator
Over the past two years, Ripple has engaged with central banks and regulators
globally to educate them on distributed networks as well as Ripple and
xCurrent creates a direct, secure connection between the banks. All payment
xCurrent’s role in the ecosystem. As business engagements are formalized,
data is sent directly between the institutions that are parties to the payment;
Ripple works with each bank to identify and assist them with meeting all
neither Ripple (the company) nor any third party have access to this data.
relevant regulatory requirements ahead of integration.
This design ensures that the banks have control over access to their customer
data and how it is stored.
• Data in flight: Data sent using xCurrent is • Data at rest: As only the banks related to the
transferred securely using HTTPS and is payment have access to the data, those banks
protected by SSL encryption. Additionally, maintain control over their customer data and
Ripple uses a combination of OAuth and transaction records, storing this information
client SSL certificate authentication to protect per their IT, cyber security and data protection
connections and endpoints. Data is only standards.
accessible to the banks that are part of the
transaction.
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KYC And AML Compliance Processes Fee Pre-Disclosure
Use of xCurrent for payments does not impact a bank’s compliance xCurrent enables banks to have complete clarity into the fees and FX cost
responsibilities. Recognizing this, Ripple’s products are designed to of the payment before initiating the transaction. This transparency allows
complement a bank’s existing customer onboarding, due diligence and the bank to accurately quote the total cost of sending the payment to the
transaction monitoring programs. consumer before sending the funds.
When using xCurrent, a bank’s customer onboarding and know your customer Fee transparency in xCurrent is a significant advantage over payment systems
(KYC) obligations remain unchanged. The bank maintains full responsibility for today, which do not provide visibility into the total cost before sending
ongoing compliance with Anti-Money Laundering (AML) and Office of Foreign the payment. xCurrent’s ability to pre-disclose all fees prior to sending the
Assets Control (OFAC or, more broadly, “sanctions”) legislation and regulations. payment not only improves the customer experience, but also enables
Banks are also responsible for ongoing monitoring of transactions conducted compliance with laws in some countries, specifically the United States.
through xCurrent in accordance with their existing transaction monitoring
program requirements. U.S. banks also maintain responsibility for compliance
with foreign correspondent account recordkeeping and due diligence
requirements specified under Section 312 of the USA PATRIOT Act. Use of
Ripple does not alter these obligations of the bank.
Ripple has designed its software to assist its bank customers in complying
with other related regulations. The messaging capability of Messenger enables
banks to comply with U.S. Travel Rule requirements. It also provides upfront
fee negotiation capabilities to assist with Regulation E pre-payment disclosure
obligations (Section 1073 of the Dodd Frank Act). The direct, bidirectional
messaging between originating and beneficiary banks allows for the secure
transfer of additional data about the payment, its sender and its recipient.
While the bank’s compliance with AML and sanctions obligations remains
unchanged, the timing of its sanctions screening activities may need to be
altered given the real-time nature of xCurrent transactions. To capitalize on the
speed at which transactions are conducted using Ripple solution, banks may
wish to augment their sanctions screening processes to pass this benefit on
to their customers. This consideration is institution-specific, dependent on the
capabilities, speed and compliance policy of the bank.
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Security
Payment Data Separation
Implementing a payment system on xCurrent provides a layer of separation
and security between payment data and settlement data for financial
transactions that are executed over ILP. Validator only sees the cryptographic
cases that it uses to mathematically verify that the each institution has
fulfilled the conditions required to execute the payment and does not require
payment data. This limits the number of times data needs to be transmitted
between the two banks. The actual payment data is encrypted and shared only
between the two institutions making payments to each other when necessary.
The following types of payment data are stored and maintained in internal
databases that are only accessible by each bank:
• Identifiers for originators and beneficiaries
• Required PII/CIP information for originators and beneficiaries
• Additional payment information such as invoice numbers
• Additional metadata
Secure Communication
Banks’ internal systems communicate with xCurrent over secure HTTPS
connections and use OAuth 2.0 for authentication. ILP components of xCurrent
use HTTPS for secure communication with each other and Messenger, using
CA certificates for authentication.
HTTPS is also used for:
• Pre-transaction communication between Messenger instances at
corresponding partner institutions
• Communication between Messenger, Validator, ILP Ledger and
FX Connector.
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About Ripple
Ripple provides one frictionless experience to send money globally using the
power of blockchain. By joining Ripple’s growing, global network, financial
institutions can process their customers’ payments anywhere in the world
instantly, reliably and cost-effectively. Banks and payment providers can use
the digital asset XRP to further reduce their costs and access new markets.
With offices in San Francisco, New York, London, Sydney and Luxembourg,
Ripple has more than 75 customers across 27 countries.
Contact Us
To learn how your bank can join RippleNet
and leverage xCurrent for cross-border
payments, please contact us at
ripple.com/contact.
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