The consortium was launched in October 2016 and represents over 30% of all banks in Japan. Members include AEON Bank, Nomura Trust and Banking, Resona Bank and Mizuho, Ripple's director of joint venture partnership, told CNBC.
This follows successful blockchain trials that used Ripples’ blockchain to do real-time money transfers in Japan as well as make cross-border payments at a significantly lower cost.
Many small banks that process low volumes of payments have to rely on their larger peers to clear the transactions because of a high fixed annual cost for membership at the clearing houses. Consequently, they have little control over the fees they are charged per transaction, making it expensive and unprofitable.
This is where blockchain comes in. It records and stores all of the transactions online securely on a peer-to-peer network, which eliminates the need to have an intermediary bank or a central hub to do the clearing and settlement.
According to analysis done by Ripple, looking at retail remittances and corporate payments, distributed ledger technology has the potential to bring down transaction costs by 60% and 50%, respectively.
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