Japan-based Mitsubishi UFJ Financial Group (MUFG), the world’s fifth-largest financial institution, has partnered with Brazil’s Banco Bradesco to develop a cross-border payments service based on Ripple’s blockchain technology.
The two banks signed a memorandum of understanding (MOU) to create cross-border payments between Japan and Brazil. The Ripple-based payment system, which will be run by MUFG subsidiary Banco MUFG Brasil, will assist the banks as they work toward commercializing a high-speed, transparent and traceable cross-border payments solution between the two countries.
Ripple is a frontrunner in the development of blockchain-based solutions for cross-border payments and settlements. Its enterprise blockchain network, RippleNet, creates a modern payments experience operating on standardized rules and processes for real time settlement, more affordable costs, and end-to-end transaction visibility. The network is made up of banks and payment providers that source liquidity and process payments, as well as corporates and FinTechs that use RippleNet to send payments.
Once the Ripple-based payment system is developed, MUFG and Banco Bradesco will be able to offer lower transactions fees to their customers. Existing payment networks have high processing and liquidity provisioning costs that result in fees as high as $25 or $35 per transaction. RippleNet’s atomic pass-fail processing will also ensure greater certainty in delivery, and its bi-directional messaging capability will provide end-to-end transaction visibility for fees, delivery time and status.