Ripple, the U.S. digital payments company, is working with 61 Japanese banks on an application that will enable customers to settle cash transfers instantly around the clock, the latest effort to apply blockchain technology in finance.
The mobile app will allow users to send funds to other bank accounts in the country, Ripple said in a statement Wednesday. Beta testing will start next month and three of the lenders -- SBI Sumishin Net Bank Ltd., Suruga Bank Ltd. and Resona Bank Ltd. -- aim to roll out the service to customers later this year.
Ripple is already working with banks in other countries to overhaul how they handle payments. Blockchain, the digital ledger technology being used for Bitcoin and other cryptocurrencies, has been touted as a potential way to track transactions in a range of industries. In Japan, banks and authorities are keen to embrace financial technology to improve efficiency as high costs and low interest rates put pressure on profitability.
The MoneyTap app will create “faster, safer and more efficient” payments, Takashi Okita, CEO of a joint venture between Ripple and Sumishin’s parent company SBI Holdings Inc. that is working with the Japanese bank consortium, said in the statement. Under Japan’s current system, cash transfers are typically only processed by banks on weekdays until around 3 p.m.
Japan recently changed the law to require banks to work with registered third parties that seek to connect to their customers’ accounts using application programming interface technology. The app will use these so-called open API connections to transfer money between bank accounts, Emi Yoshikawa, director of joint venture partnerships at Ripple, said in a telephone interview.
Other banks in the consortium will introduce the app to their customers over the next three to four years, Yoshikawa said. While the software is focused on domestic transfers, the group will seek to expand it to cross-border payments and interbank settlements in the future, she added.
Resona Bank aims to “contribute to promoting cashlessness while improving customer convenience and reducing the cost to society,” said Yoichiro Higuchi, leader of the lender’s settlements group.