Banco Bilbao Vizcaya Argentaria SA (BBVA), Spain’s number two lender, has executed its first cross-border payments using a system based on the software that supports bitcoin.
According to American Banker, using a program built by San Francisco–based Ripple, BBVA has transferred about 50 Euro-denominated payments to Mexico from Spain in seconds. These types of transactions normally take up to four days to clear.
BBVA plans to offer Ripple’s service to a small group of clients in the coming weeks as a tryout, giving corporate customers a quicker and cheaper way to pay overseas suppliers and execute other international transactions, said Alicia Pertusa, head of the lender’s Digital Transformation in the Investment Banking unit.
On average, Ripple costs 81 percent less than the correspondent banking network used for decades to send global payments. And with Ripple, companies can track their payments and see precisely how much it will cost to complete the transfer.
“It’s not just the real-time transfer that’s important here but the information we can send with the payment,” Pertusa said. “That’s very relevant for our clients because they could begin streamlining their reconciliation systems.”
Ripple is betting the international payments system, which processes more than $20 trillion in transactions annually, is ready for an overhaul. The company has formed partnerships with Bank of America Corp., UBS Group AG and Standard Chartered Plc, among others. Last May, employees at Banco Santander SA’s U.K. division started using Ripple’s cross-border payment app internally.
But in order to become a true payment alternative, Ripple needs financial institutions to start accepting payments from one another on its network.
“We are talking to several institutions,” said Marcus Treacher, Ripple’s global head of strategic accounts. “Negotiations are ongoing.”