Ripple News: CEO Garlinghouse Predicts XRP Will Take Over SWIFT, Ushering in New Payment Systems

Ripple’s CEO, Brad Garlinghouse, has confidently claimed that the SWIFT payment system, the global standard for international transactions for more than fifty years, is now outdated and needs to be resolved. Garlinghouse believes that XRP, Ripple’s native cryptocurrency, has the potential to revolutionize the financial industry by offering a more efficient, transparent, and cost-effective alternative. According to Garlinghouse, XRP is set to take over SWIFT’s role in cross-border payments, making way for a new era of global financial transactions.

SWIFT’s Ageing Infrastructure and Its Limitations

The SWIFT network has been the backbone of international financial transactions since 1973, connecting thousands of banks and institutions around the world. Although SWIFT has been crucial in enabling cross-border payments, it hasn’t evolved enough to keep pace with the requirements of today’s rapidly changing digital economy.  

One of the main issues is its error rate, which stands at around 6%, often caused by incorrect or mismatched account details. These errors can lead to delays, reversals, and additional costs for financial institutions and their clients.

Garlinghouse points out that despite its age and the numerous technological advancements in the financial sector, SWIFT has continued to operate on outdated architecture that struggles to support modern financial transactions. He argues that SWIFT’s inefficiencies, especially in cross-border payments, create friction and extra costs that Ripple aims to eliminate with its innovative solutions.

Ripple’s Efficient, Real-Time Solution

Ripple’s approach to cross-border payments involves combining both liquidity and messaging into a single, cohesive system. Unlike SWIFT, which serves only as a messaging protocol, Ripple’s XRP Ledger (XRPL) enables real-time settlement of transactions, reducing processing times from several days to mere seconds. This is achieved by using XRP as a bridge currency, which can facilitate immediate transfers between parties in different countries without the need for pre-funded accounts.

Garlinghouse emphasizes that Ripple’s technology offers substantial improvements over SWIFT, including reduced fees and the ability to provide real-time feedback during transactions. This functionality helps minimize errors and enhance the reliability of cross-border payments. Ripple’s system also boasts a significantly lower error rate, with estimates suggesting that it could be as low as 0.1%—a stark contrast to SWIFT’s 6%.

XRP’s Role in Boosting Liquidity

Ripple’s XRP is not just a messaging system; it also provides a unique liquidity solution. Traditionally, financial institutions have relied on large banks to supply liquidity for international transactions, often using pre-funded accounts in various markets to facilitate payments. However, this method ties up capital and limits flexibility.

XRP offers a solution by acting as a bridge currency in Ripple’s payment system. With XRP, institutions can transfer funds instantly between markets without needing to pre-fund accounts, thereby unlocking capital and enhancing liquidity. Garlinghouse explains that this mechanism provides significant advantages over SWIFT, enabling financial institutions to improve efficiency and reduce costs.

Ripple’s Growing Influence and Vision for the Future

Ripple’s influence is steadily growing, with over 100 financial institutions worldwide, including many connected to SWIFT, already adopting Ripple’s solutions. Garlinghouse is confident that Ripple’s technology is set to surpass SWIFT, claiming, “What we’re doing and executing on a day-by-day basis is taking over SWIFT.”

Looking forward, Garlinghouse envisions XRP as the foundation of a new, more efficient global payment infrastructure that can replace outdated systems like SWIFT. As Ripple continues to expand its network and attract more financial institutions, the company’s vision of reshaping global finance seems increasingly within reach.