In a recent report published by Singapore-based multinational banking and financial services company DBS Bank, it is stated that Ripple’s solution is the cheapest on the market compared to other payment instruments such as cheques, credit and debit cards or bank transfers.
The report shows all the pros and cons of the various payment tools available specifically for international payments. DBS Bank serves Southeast Asia and since the 1960s has managed assets worth $340 billion with annual revenue of $10 billion.
After obviously excluding the solution provided by cheques, the report analysed the ACH (Automated Clearing House) system, which allows lower costs, about $0.05, but which is not very user-friendly and quite slow.
“When the batch processing occurs overnight, this means there will be one to three days of float enjoyed by the banks. Float is the time between the date when the payer is debited by their bank (and therefore ceases to earn interest on their funds) until the date when the beneficiary is credited by their bank (and therefore starts to earn interest on their funds).”
The report continues with reference to both the RTGS (Real-Time Gross Settlement) system and the SWIFT system, pointing out that both are the most expensive to use.
In general, the order of preference for domestic payments is usually:
- RTGS: most expensive
- Cheques: expensive
- Fast/immediate: Cheap
- ACH: Cheapest
For cross border payments the order is:
- SWIFT/ Telegraphic transfer: most expensive
- Cross-border ACH: cheaper
- Ripple: Cheapest
Finally, the report also makes a small observation on bitcoin and blockchain technology, casting doubt on the extreme volatility of assets for use by companies.
“Bitcoin and other crypto currencies like Ether and Ripple are much in the news. Although some corporates accept bitcoin for retail collections, this is normally on the basis that the bitcoin will be immediately converted to fiat money. Most non-fiat crypto currencies are too volatile for corporate use. Furthermore, it is unclear that they will be able to scale to large payment volumes, hence, the famous bitcoin fork dilemma.”