RippleNet and Ripple xCurrent Explained

RippleNet and Ripple xCurrent Explained

Last Updated: 1st November 2018

Ripple is a real-time gross settlement system (RTGS), currency exchange and remittance network. Ripple is most well known as a tool that can remove banking inefficiencies, by serving as a blockchain based distributed payment protocol that facilitates instantaneous and low-cost transactions between various banks and financial institutions. Ripple is able to do this by leveraging its novel RippleNet and Ripple xCurrent solutions.


The current landscape of cross-border banking transactions is one that can be said to house numerous inefficiencies. There is a fragmentation of payment networks between transacting institutions, which results in slow payment processing times and high fees that are passed down to users. This current global payment system is one that cannot seemingly keep up with a growing global demand for rapid low-cost payments. For example, individuals that conduct remittance payments to their friends and family abroad can find themselves subject to considerable processing fees. RippleNet was conceived to tackle these inefficiencies, and thus change the landscape of cross-border international payments.

RippleNet is a singular, global network of banks and financial institutions that can send and receive payments through the use of Ripple’s distributed financial technology. RippleNet is designed to produce real-time and low-cost payments by serving as a unified decentralized global network of banks and financial institutions. By removing the fragmentation in payment processing, RippleNet can deliver a frictionless experience for global payments. Participants of RippleNet, by making use of the same technology, and abiding by a standard framework of payment rules and standards, overcome the inefficiencies that a fragmented payment system produces.

RippleNet Source:

Benefits of RippleNet are said to be the following:

  • Access – Entry into a singular global, decentralized network of banks and financial institutions, all subject to a unified framework of standard rules, formats and governance.
  • Speed – Make use of a rapid real-time settlement system that enable banks to make cross-border transactions in seconds, instead of days.
  • Certainty – RippleNet participants minimize risk of failure, and provide end-to-end transparency with regard to every payment that is executed on the platform.
  • Cost – The total cost of settlement for every executed transaction is considerably reduced.

The RippleNet ecosystem categorizes participants into two groups: network members (which are banks and payment providers) and network users (which include corporates, consumers and other similar entities)

Network Members: Enablers of RippleNet

  • Banks – These actors seek to process payments for network users, which include entities such as corporates and consumers. Banks can leverage the RippleNet platform to service their existing customers.
  • Payment Providers – These entities look to provide liquidity and expand the payout reach of banks on the platform.

Network Users: Originators of RippleNet

  • Platform Businesses – These types of businesses look to send payments of a high volume and low value to a global base of suppliers, merchants and employees.
  • Corporate Treasury – Entities with intentions to send large payments across their own global supply chains for increased capital efficiency, and control.
  • Banks and Payments – These actors look only to send payments, instead of processing them.
  • Consumers – Individuals that are sending global payments by use of their banks or payment provider for a rapid and cost-efficient avenue.

Ripple xCurrent

xCurrent is Ripple’s enterprise solution that is responsible for facilitating the instantaneous settlement and end-to-end tracking of cross-border payments between RippleNet members. There are four key components that constitute Ripple’s xCurrent:

1. Messenger: This is the application programming interface (API), bidirectional messaging element of Ripple xCurrent. The purpose of this component is to establish a link between transacting banks, in order to connect the beneficiary bank’s Messenger to exchange information such as: ‘Know Your Customer’ (KYC), risk, fees, FX rates and payment details. Every end-to-end payment that is made using xCurrent possesses a payment ID that can be used to determine the status of the payment at any point during execution. Which makes it especially useful in providing effective troubleshooting for failed or delayed payments.

2. Validator: The function of the validator component in Ripple xCurrent is to cryptographically confirm the success or failure of a payment. This component serves as a single source of truth for transacting parties, whilst also making sure to preserve the privacy of bank customers.

3. ILP Ledger: The ILP ledger, also known as ‘The Interledger Protocol’, is an open and neutral protocol that enables interoperation between different ledgers and payment networks. This xCurrent feature is used to monitor the credits, debits and liquidity across various transacting parties. ILP enables transacting parties to settle funds atomically, meaning that transactions can settle instantly or not at all. Furthermore, ILP also allows funds to be settled instantaneously.

4. FX Ticker – This component of xCurrent promotes exchange between ILP Ledgers by allowing liquidity providers to post FX rates. The FX Ticker provides the rate of exchange between any pair of ledgers that it is configured to. It also keeps track of the account, currency and authentication credentials for each configured ILP Ledger. During a transaction, the FX Ticker will coordinate transfers on ILP Ledgers for settlement, ensure the validity of an FX quote, and also transfer the payment amount to the beneficiary bank’s ILP ledger.