U.S. tech giant IBM has partnered with Stellar to launch its near-instant, cross-border payment platform. With IBM’s Blockchain World Wire, financial institutions will clear and settle cross-border payments in a matter of seconds and will give SWIFT and Ripple’s XRapid a run for their money.
IBM and Stellar – the Killer App?
The new product announced by IBM in collaboration Stellar will enable exchanging fiat currencies to cryptocurrencies such as Stellar’s Lumens (XLM). In a website specifically created to explain the new concept the company explained:
“Financial institutions use their existing payment systems – seamlessly connected to World Wire’s APIs – to convert the first fiat currency into the digital asset. World Wire then simultaneously converts the digital asset into the second fiat currency, completing the transaction. All transaction details are recorded onto an immutable blockchain for clearing.”
IBM plans to present its system to representatives of financial institutions and other interested parties in the Sibos conference organized by SWIFT that will take place in Sydney in late October.
World Wire will deploy a fiat currency or a digital currency to a bridge between both currencies where a set of APIs will enable financial institutions to use available payment solutions to first convert the fiat into a crypto after which World Wire will convert the cryptocurrency into the second fiat currency. IBM says its solution cut the costs associated with cross-border transfers for consumers and institutions.
The transaction data will be stored in a blockchain for clearing, according to IBM’s explanation:
“Sending money across borders today requires a series of intermediaries for both clearing and settlement, each adding time and cost to the process […] with IBM Blockchain World Wire, clearing and settlement with finality happens in near real time.”
Stellar’s Increasing Relevance
IBM has worked with Stellar for a while now to get into the blockchain industry. Stellar’s open-source decentralized protocol will enable transactions between different pairs of currencies and enable IBM to achieve its goal to create a monetary establishment the clears and settles cross-border funds in seconds.
IBM said the benefits of Blockchain World Wire will include among other things:
“Clearing and settlement with finality occur in close to real-time. The answer makes use of digital property to settle transactions — serving as an agreed-upon retailer of worth exchanged between events — in addition to integrating cost instruction messages. All of it means funds can now be transferred at a fraction of the price and time of conventional correspondent banking.”