IBM World Wire is a new financial service created to simultaneously clear and settle cross-border payments in real time. It integrates with all existing payment systems to replace costly opacity with affordable transparency.
How IBM World Wire works
IBM World Wire uses both blockchain technology and the Stellar protocol to make it possible for financial institutions to settle and clear cross-border payments in a matter of seconds.
It works by using a stablecoin or other digital assets as a bridge between any two fiat currencies. By doing this, the digital asset is able to facilitate the transaction between the two banking institutions and supplies them with important settlement instructions and information.
The institutions will still be able to use their existing payment systems, but they will be seamlessly connected to World Wire’s APIs to allow the system to convert the first fiat currency into a digital asset.
After this, IBM World Wire changes the digital asset into a second fiat currency in order to complete the transaction. All transactions are then recorded onto an immutable blockchain to allow for the clearing of the transaction.
How can it change global payments?
IBM World Wire has the ability to completely disrupt the current banking system. It is a simple and configuration-ready solution that can integrate with any system. It can also support payments of any size to any destination in the world in a variety of asset types.
Faster payments
World Wire can provide much faster payment processing than the average payment system due to its simultaneous clearing and settlement features. It has also reduced the amount of time needed to resolve disputes. The service eliminates the need for multiple parties to execute the process of transactions due to the use of blockchain and its decentralised technology.
Lower costs
The service has also reduced the capital requirements for all cross-border transactions due to its use of blockchain technology. It also has lower clearing costs and has reduced the time needed to connect new markets to capital flows.
Increased efficiency
Finally, IBM World Wire is unique against any other payment system as it has one exchange fee between all currencies, making it easy for customers to know they are using a fair system. Blockchain technology also allows the service to have end-to-end transparency of all transactions carried out.
Why we need World Wire
If a company, business, or financial institution wants to send money across borders today, it requires a series of intermediaries for the clearing and settlement of the transaction. With each transaction, there is an added cost and time to the process.
However, IBM has changed this. By using IBM World Wire, the clearing and settlement of each transaction happens near real time. By using digital assets to settle all transactions, the solution serves as an agreed-upon store of value exchanged between two or more parties. Along with this, IBM also has the ability to integrate payment messages, meaning all funds can be transferred at a fraction of the cost and time of traditional banking and payment systems.
The future of global payments
We already know current global payment systems aren’t adequate enough for the high number of transactions that are happening across the world. But with solutions like IBM World Wire and other blockchain and crypto payment systems, people will finally have the ability to send money globally with ease.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.