Recently, there has been a lot of speculation that the US Federal Reserve would launch FedNow service as we reach 2023 or 2024. Interestingly, Ripple has been in partnership with NACHA for almost five years now, and NACHA works very closely with Federal Reserve as well as has 11k members with it.
Many in the community are speculating that Ripple’s intentions behind the alliance with NACHA were to build some relationships with the US Federal Reserve. Also, Regulatory Relations Director at Ripple, Ryan Zagone joined the Faster Payments Task Force board.
And now, after that all, as the Federal Reserve is rumored to start FedNow service, people have started connecting the nodes that Ripple might play an important role in FedNow service of US Federal Reserve. Let’s see how vital the Ripple NACHA partnership itself is.
Back in June 2014, Ripple Labs announced to the world its decision to join the NACHA Payments Innovation Alliance. As a startup company that is credited for creating a platform for virtual payments and settlements using existing fiat currencies, Ripple Labs was quick to join the partnership that promises innovation around the transfer of money.
According to the statement that was released by Ripple Labs:
“Having invaluable experience in developing and overseeing industry standards for years, institutions such as SWIFT and NACHA play a pivotal role in shaping new payment technologies and systems around the world in a manner that is safe and productive.”
According to many crypto and financial analysts, Ripple’s decision to join the NACHA Alliance is proof that the crypto company is expressing its interests to move towards the banking sector.
Keeping in mind that Ripple gateways can be configured to abide to Know Your Customer (KYC) and Anti-money Laundering (AML) policies, some believe Ripple could make a good banking partner. This fact positions Ripple XRP above other virtual currencies such as Bitcoin in the crypto adoption by banks.
Previously known as the National Automated Clearing House Association, NACHA is a non-profit organization that is made up of financial institutions that operate as trustees for the Automated Clearing House (ACH) system. The ACH is the cornerstone for virtual payments and movement of funds and financial information in the US.
Similar to the SWIFT network, the ACH Network facilitates cross-border money transfers.
Although Ripple Labs is considered more as a technology company rather than a financial institution, Ripple XRP is both a technological platform (blockchain) and a currency. The Ripple network provides an open-source protocol that is designed to handle fast and inexpensive transactions.
Ideally, Ripple Labs strives to replace some of the underlying infrastructure functions of the ACH platform.
Posting the news of its decision to partner with NACHA, Ripple Labs posted on its blog the following information:
“Our decision to partner with the NACHA Alliance avails to us further opportunities to advance our mission of partnering with everyone in the financial industry. We desire to work with everyone in the industry to help drive innovation around the transfer of money.”
The NACHA Payment Innovation Alliance
As a non-profit membership association, NACHA is tasked with overseeing the ACH (Automated Clearing House) platform. The ACH system is responsible for one of the most significant, safest, and most reliable payment networks in the world.
Every year, NACHA and the ACH platform play a massive role in the transfer of tens of trillions of US dollars around the world. The NACHA Alliance is made up of billions of virtual financial transactions that include virtual bill payments, person-to-person and business-to-business payments, direct deposit, government benefits, and social security.
Through its rule-making and oversight powers, the NACHA alliance avails the much-needed legal foundation for virtual settlements systems to effectively operate. As it does this, the NACHA alliance also works to update existing technologies and develop new settlement systems.
In some quarters, NACHA is also known as the Electronic Payment Association. The NACHA Alliance represents over 11,000 financial institutions in the US who fund the establishment either directly or indirectly.
Corporate Effects of Ripple’s Partnership with NACHA
Since its inception, Ripple XRP has always maintained the Ripple network is seamlessly tailor-made for financial institutions and organizations. The management of Ripple maintains that its involvement in the financial market has always been the company’s long-standing drive.
Ripple’s EVP of Business Development, Patrick Griffin, once said:
“As an internet protocol, Ripple XRP allows financial players to securely transfer money in any currency to any part of the world in real-time. Our corporate focus is to assist banks, financial institutions, money transfer companies, and clearinghouses to use our platform for bilateral payments and straight-through processing.”
Indeed, the partnership between the two separate entities promises to play a vital role in FinTech for many years to come. The alliance between Ripple and NACHA could see revolutionization of the traditional banking system by lowering transaction costs and speeding up transactions.
Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.
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