Eye on Blockchain: Ripple Teams up With Finastra; Firms Line up to Support Libra

The London-based financial-services technology provider Finastra said Wednesday that it has agreed to offer blockchain technology from Ripple Labs Inc. for cross-border payments processed by its client institutions. In related news, more than 1,500 firms have inquired with the Libra Association about joining the group, the association said, in the wake of PayPal Holdings Inc.’s withdrawal and a sharp warning Tuesday from two U.S. Senators.

Finastra’s deal, which will link its clients to the more than 200 institutions globally that use RippleNet, will give them end-to-end transaction tracking along with transparency on fees, delivery time, and status, the company said.

The arrangement also will grant Ripple’s clients access to Finastra’s network of banking clients, which is expected to boost overall network volume. Finastra says its clients process “millions” of transactions monthly, without being more specific.

The arrangement could also help control costs. “Collaborating with a company like Ripple that harnesses innovative blockchain technology to provide fast and reliable cross-border payments is particularly beneficial for our customers in geographies where cost of correspondent banking is high,” said Riteesh Singh, a senior vice president at Finastra, in a statement. 

For San Francisco-based Ripple, the deal is expected to help extend its worldwide network. “Finastra is an established fintech player and works with a majority of the world’s top banks,” said Marcus Treacher, a senior vice president at Ripple, in a statement. “This partnership will enable Ripple to expand the reach and solutions for our partners, and the footprint of RippleNet, while allowing customers to transact directly with each other.”

The deal with Ripple follows by days Finastra’s launch of a real-time bill-payment application for financial institutions. The application is expected to help banks recover bill-pay market share from biller-direct sites. Finastra was formed in 2017 from the merger of two banking-software companies, Misys and DH Corp.

In June, Ripple bought $30-million worth of common stock in Dallas-based MoneyGram International Inc. The transaction followed the announcement early last year of a two-year deal under which MoneyGram would test Ripple’s XRP digital currency on its xRapid remittance product. Ripple indicated last year that xRapid transactions are settled in two minutes or less, compared to two to three days using conventional cross-border channels.

Also late on Tuesday, more bad news broke for Facebook Inc.’s Libra cryptocurrency project as Bloomberg reported two U.S. senators sent letters to the remaining payments companies backing Libra urging them to think twice about participating in the project.

In the letters, Democratic Senators Sherrod Brown of Ohio and Brian Schatz of Hawaii reportedly warned Mastercard Inc., Stripe Inc., and Visa Inc. that Libra poses a risk to financial systems around the world. News of the letters follows PayPal Holdings Inc.’s decision Friday to withdraw from the Libra Association, which is composed now of 27 companies including Facebook. Four of the companies come from the payments business, including Europe’s PayU.

Regulators, central bankers, and legislators in the United States and Europe have expressed concerns that Libra could be exploited for such crimes as money laundering and terrorist financing. David Marcus, a Facebook executive who is heading up Libra for the social-media giant, said in a series of tweets last week that “we are very calmly and confidently working through the legitimate concerns that Libra has raised.”

Representatives for Mastercard, Stripe, and Visa did not immediately respond to a request for comment on the Senators’ letter. Dante Disparte, head of policy and communication for the Libra Association, responded with a statement that “over 1,500 entities” have so far approached the association about joining. 

“The Libra Association maintains its commitment to not launch until questions and concerns by regulators are addressed,” Disparte said. “This is enshrined in our long launch runway, which has helped inform regulators, policymakers, and other stakeholders around the world about our commitment to responsible financial innovation and strong oversight. Our mission of financial inclusion enjoys broad global support.”

Association members are expected to attend a meeting next Monday in Geneva, Switzerland, to appoint a board of directors and deal with other business.