Settling Cross-Border Payments via Distributed Ledger
Sector: Tertiary sector · Industry: Banking and financial services · Organisation: Banco Santander · Maturity level: Production
Banco Santander has commercially deployed One Pay FX, a cross-border payments service built on Ripple's distributed ledger technology, to settle international transfers on the same or next day for retail and SME customers. The solution replaces cumbersome correspondent banking paths with direct cryptographic messaging and settlement protocols. This provides end users with complete fee transparency and guaranteed delivery times for cross-border currency transactions.
Documentation status
- Project status: Production (as of 12 April 2018) — Banco Santander launched the production operation of One Pay FX in April 2018 initially in Spain, the UK, Brazil and Poland.
- Evidence: Evidence medium
- Editorial review: pending
Description
Banco Santander implemented a distributed ledger-based payment infrastructure with One Pay FX that drastically accelerates transfers to other currency zones. Traditional foreign transfers run through multiple intermediary banks and often take several days with unclear final fees. The technology enables customers to see exact fees and exchange rates bindingly before authorising and to complete the transaction within a very short time.
In April 2018, Banco Santander rolled out the One Pay FX service for private and business customers in core markets such as Spain, the UK, Brazil and Poland. The technical basis is Ripple’s enterprise software, which allows direct cryptographic reconciliation between the booking systems of the institutions without relying on native cryptocurrencies like XRP. This architecture eliminates sequential clearing stages of the correspondent banking system, so payments usually arrive on the same day or reliably the next day at the recipient. Users also receive end-to-end transparency over the status of their foreign payment in the mobile app, similar to parcel tracking in logistics. The launch marked one of the world’s first large-scale commercial production deployments of DLT payment solutions by a globally systemically important bank.
Perspectives
B2B — organisations perspective
Small and medium-sized enterprises benefit from predictable and accelerated processing of their foreign invoices. Guaranteed same-day or next-day settlement reduces liquidity bottlenecks and lowers exchange rate risk in cross-border trade.
B2C — consumers perspective
Private customers can make international transfers via their regular banking app and see exactly what amount arrives in the target currency. Long waiting times and unexpected deductions by intermediary correspondent banks are a thing of the past.
Employees perspective
Employees in settlement and support departments have to handle significantly fewer complaints about delayed or misdirected foreign transfers. Automated pre-validation of payment data significantly reduces manual investigation effort.
Benefits
General
- Reliable execution of international transfers on the same or next day
- Complete cost transparency and fixed exchange rates before payment release
- Increased fault tolerance and traceability through cryptographic data verification
B2B — organisations
- Optimised liquidity planning through predictable payment receipt at the supplier
- Reduction of transaction costs compared to conventional foreign transfers
B2C — consumers
- Transparent fee structure without hidden deductions from intermediaries
- Real-time tracking of payment status directly on the smartphone
Employees
- Reduced manual checking and reconciliation effort in the back office
- Lower error rates through automated pre-validation of payment data
Challenges
General
- Complex regulatory coordination across multiple national legal jurisdictions
- Need for robust failure concepts at interfaces to legacy systems
B2B — organisations
- Harmonisation of existing ERP and accounting interfaces for corporate clients
B2C — consumers
- Building user trust in novel, technology-supported transfer methods
Employees
- Required training of customer support for the new settlement logic
Technology foundation
The solution is based on Ripple's distributed ledger technology (xCurrent or RippleNet), which enables bi-directional real-time exchange of transaction data. This allows banks to mutually validate payment details before booking execution without necessarily relying on native crypto-assets like XRP.
Implementation examples
Introduction of the One Pay FX international transfer system
Elimination of delays, high costs and lack of transparency in traditional correspondent banking clearing for international transfers.
Banco Santander introduced the mobile payment solution One Pay FX based on Ripple's distributed ledger technology to significantly accelerate cross-border payments.
The large bank rolled out the system for customers in Spain, the UK, Brazil and Poland to process international money transfers within hours or by the next day. Through direct informational coupling via the ledger protocol, fees and exchange rates can be calculated bindingly in advance. The system operates in commercial production use and demonstrates the integration of modern ledger architectures into the regulated banking environment.
High lack of transparency regarding intermediary fees and multi-day processing times with conventional transfers via the SWIFT network.
Tags
Payments, Distributed Ledger, Cross-Border Payments, Fintech, Foreign Exchange