Earthport Launches The First Fully Compliant Distributed Ledger Gateway

Earthport pioneered a cheap, streamlined bank-to-bank payment network that allowed smaller international transfers, typically $50,000 and less, to be sent to banks around the world. Their service is sold as a white label product to financial institutions around the world, including Western Union, Bank of America, Xoom, and Stripe.

The integration of the Ripple protocol means that Earthport’s clients will be able to send real time payments to any of the banks in its large network.

“We are thrilled to expand our Payment Network and our mission to provide ‘fastest payments possible’ with easy access to Distributed Ledger so that our clients can realize its benefits, including immediate transaction settlement and reduced counterparty risk,” said Hank Uberoi, the CEO of Earthport.

“We have experienced significant interest in this protocol and our clients are far along into the planning stage for initial testing.”
— – Hank Uberoi, Earthport CEO

The partnership was originally announced in December of 2014, when the two firms expressed their interest in bringing a faster, smoother solution to international payments. Since then Ripple Labs, the company behind the protocol, has announced pilots and preliminary discussions with numerous financial institutions, including the Commonwealth Bank of Australia, German bank Fidor, and Western Union.

Other than Fidor Bank, which integrated the Ripple protocol for internal bank account transfers earlier this year in may, no other financial institution has publicly announced a service or product utilizing the Ripple protocol, or any distributed ledger. One of the biggest reasons is because of the regulatory uncertainty surrounding the technology. Earthport made sure to stress that the service was compliant with necessary compliance efforts, like Anti Money Laundering (AML) and Know Your Customer (KYC).

“Earthport allows banks to connect to the Ripple network without having to establish their own infrastructure. This solution brings best-in-class AML monitoring, sanction screening, transaction monitoring and KYC tools to enable compliance control.”
— – Earthport press release

Earthport’s President of Europe, Daniel Marovitz, wrote on Linkedin that the launch was big news for the company, and that it should ‘break the standoff so real banks can move to [distributed ledger technology] easily, quickly, cheaply and safely.”

Given Earthport’s large and diverse customer base within the financial industry this integration could mean first hand experience with the technology for companies like Western Union, and others who might decide to further integrate the technology into their internal payment infrastructure.

“Banks are actively exploring what opportunities decentralised ledger-based solutions could bring. The challenge is finding a way to harness the benefits, yet ensure the absolute essentials – security, compliance, resilience – are met, along with an understanding that payments involve far more than just a movement of value,” said Gareth Lodge, an analyst at financial services advisory firm Celent in an statement.

The International Data Corporation (IDC), a renowned analysis and advisory firm, recently released a report about the Ripple protocol and the firm behind it. The report concluded that the adoption of Ripple and other distributed ledger protocols will “grow exponentially in the years ahead.”

“Thanks to the support of Ripple Labs and other interested parties, Ripple is currently best placed to take this market share,” read an abstract of the report. “In the short term, more parties will undergo pilot and proof of concept projects, and domestic banks are likely to partner with counterparts overseas for the purpose. There will be an initial opportunity for banks or companies like Earthport to charge clients for the ability to make instant global payments, especially as IDC expects initially that Ripple will be adopted not as an industry-wide solution like UK Faster Payments, but by innovative banks.”

The integration marks the largest adoption of distributed ledger technology to date, and will serve as a real world test to see if the technology can holds its own. Other players in the distributed ledger space include startups Eris Industries and HyperLedger. HyperLedger is building a similar institutional settlement solution, but Eris hopes to expand the legal potential of the technologies with smart contracts, computer enforced agreements. Eris’ technology, like Ripple Labs’, has mostly only see test environments with very few companies actually using it, although EverLedger does use the platform for its fraud solution for luxury goods.