Key takeaways
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SWIFT handles most of the world’s bank transfers through its messaging network, while Ripple uses XRP to make faster and cheaper cross-border payments.
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Beyond payments, XRP is also used for remittances and is being explored for tokenized loyalty and DeFi applications, with institutions like SBI Holdings testing integrations.
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SWIFT is developing a blockchain-based ledger for real-time payments, interoperable with major networks and supporting tokenized assets.
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SWIFT still faces challenges such as outdated systems, regulatory hurdles, institutional inertia, and competition from Ripple’s expanding network.
Cross-border payments move billions of dollars each year, and two names dominate: the long-running SWIFT (Society for Worldwide Interbank Financial Telecommunication) and Ripple, a newer player built around blockchain technology. SWIFT runs a large global network but remains slow, while Ripple uses its XRP token (XRP) for near-instant settlements. Over time, Ripple has built its technology and reputation as a faster, more efficient alternative to SWIFT’s older, more expensive system.
But SWIFT no longer plays the role of defender. It is developing a shared ledger with Consensys, with the aim of directly competing with Ripple. This article examines how SWIFT’s system works, its blockchain projects and the challenges it still needs to overcome.
Understanding SWIFT: The Messaging System Behind International Money Transfers
SWIFT is at the heart of global banking communications. It does not move funds itself, but provides a secure, standardized messaging network that allows banks and payment providers to exchange instructions for cross-border transactions.
When a customer sends money abroad, their bank uses the SWIFT network to send a secure payment message to the recipient’s bank. This message includes details such as account numbers, amounts and reference codes. Each bank has a unique SWIFT/bank identification code (BIC) that ensures the message reaches the correct destination.
SWIFT serves as the trusted intermediary for global finance, offering encrypted, authenticated and trusted messaging in more than 200 countries. By standardizing communication, it reduces errors, speeds up settlements and promotes compliance. It has been the backbone of international money transfers for decades.
Did you know? SWIFT was founded in 1973 in Belgium by 239 banks from 15 countries to replace the slow and error-prone Telex system with faster, more secure financial communication.
The Diversified Impact of XRP: Shortening Payments, Strengthening Loyalty, and Enabling DeFi
International payments via XRP can reduce or eliminate pre-financing, speed up settlement and reduce costs. SBI Remit in Japan uses XRP for remittances to the Philippines, Vietnam and Indonesia. Similarly, Pyypl has integrated XRP through Ripple’s On-Demand Liquidity (ODL) for remittances between parts of Africa and Asia, targeting unbanked users.
Beyond payments, XRP is integrated with travel and loyalty services. For example, Webus/Wetour plans to use XRP (backed by a proposed $300 million reserve) to support blockchain-based vouchers and loyalty points for Air China’s PhoenixMiles members. These members will, in the future, be able to use XRP for overseas services such as airport transfers and premium rides.
Institutions are now increasingly viewing XRP as a key operational and treasury asset. SBI Holdings, for example, not only invests in Ripple, but also integrates XRP into its subsidiaries (SBI Remit, SBI VC Trade) and maintains large reserves of XRP.
The XRP Ledger is a fast, low-cost blockchain used for cross-border payments, tokenized assets, and decentralized finance (DeFi) projects. It relies on a consensus protocol rather than mining, which reduces energy consumption and operational costs compared to proof-of-work networks.
The SWIFT blockchain project: architecture and ambition
SWIFT’s blockchain initiative is designed for interoperability between public and private chains and for the management of regulated stablecoins and tokenized assets, positioning it as a versatile infrastructure for the future.
A key feature of SWIFT’s blockchain project is real-time cross-border payments. The system is designed to enhance existing digital infrastructure rather than replacing it entirely. This approach makes it easier for financial institutions to integrate it into their current systems, reducing one of the biggest barriers to adoption.
By adopting blockchain, SWIFT aims to maintain its central role in global payments as stablecoins and networks like XRP gain traction. The project aims to keep banks within the SWIFT ecosystem by modernizing its infrastructure and strengthening its position at the heart of international finance.
Did you know? Ripple’s technology can install on the XRP Ledger in three to five seconds, while SWIFT-based cross-border transfers often take one to five business days.
How SWIFT’s Blockchain Could Reduce Ripple’s Advantage
SWIFT’s blockchain project builds on its long-standing dominance in global banking and settlements. Its network already connects thousands of banks and financial institutions around the world, giving it a scale that Ripple might struggle to match. Ripple’s ODL system, which uses the XRP token as a bridge currency, still offers faster and cheaper cross-border payments. For SWIFT, the main challenge is to improve liquidity to achieve the same level of efficiency as Ripple’s ODL model.
Network effects will also play an important role. Since most institutions are already linked to SWIFT, banks may find it easier to adopt its new shared ledger instead of switching to Ripple’s system. For Ripple, convincing financial institutions to switch networks remains a major challenge. SWIFT’s neutral stance on tokens and settlement methods could also help it maintain an advantage over Ripple.
While Ripple’s model relies on XRP as a bridge asset, SWIFT’s next ledger is designed to support a broader range of regulated tokens, including stablecoins and tokenized assets. This flexibility could weaken XRP’s dominance in cross-border settlements, especially if banks move towards multi-asset payment systems.
Did you know? Ripple’s On-Demand Liquidity (ODL) has been used by SBI Remit in Japan to send money to countries like the Philippines and Vietnam.
The challenges facing SWIFT
SWIFT’s blockchain project still faces obstacles that could slow down its deployment. One of the biggest challenges is connecting the new system to existing banking infrastructure while keeping everything technically compatible. Given that SWIFT operates a long-established global messaging network, making it work well with a distributed ledger without disrupting current services will be a complex task.
Another significant challenge is regulatory compliance across jurisdictions: varying rules on digital assets, stablecoins and tokenization can complicate cross-border deployment. Additionally, many financial institutions are cautious; they may be reluctant to adopt new infrastructure unless its benefits are clear and risks are mitigated.
SWIFT also faces tough competition from Ripple’s long-standing partnerships focused on real-time settlement. Unless SWIFT can demonstrate clear and measurable benefits, its blockchain project could be seen as a supporting effort rather than a leading solution.
Will SWIFT’s blockchain challenge or complement Ripple?
Moving forward, SWIFT’s blockchain ledger could reshape global payments in two ways. It could coexist with Ripple, maintaining its dominant position in the regulated banking sector. Meanwhile, Ripple may continue to focus on liquidity and settlement efficiency in emerging markets. Another possibility is that SWIFT uses its vast network to gradually overtake Ripple, reducing the industry’s reliance on proprietary tokens.
The outcome of this rivalry will shape the future of cross-border payments. Ripple’s response will be crucial. Competition between the two could spark faster innovation and lead to more real-world applications through partnerships with fintechs and regional banks.
Ultimately, the deciding factor won’t just be better technology. Other elements, such as network dynamics, institutional trust and alignment with the broader goals of global finance, will also play a major role.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.
