It only takes five seconds to transfer money from Japan to Thailand. Will millisecond-level blockchain transactions become a reality?

An era is emerging where commercial retail bank-to-bank money transfers are nearly instantaneous, powered by blockchain technology.

The first blockchain-based instant remittance service between Japan and Thailand officially started today. Thailand's Siam Commercial Bank (SCB) and Japan's SBI Remit jointly launched this Ripple blockchain-based service to establish a new payment channel between the two countries. The Thai-Japanese remittance channel transfers about $250 million per year, as there are more than 40,000 Thais living in Japan.

Two to five seconds

The commercial blockchain capabilities of the two banks will enable the transfer of personal funds from Japanese yen to Thai baht. SCB said that once the transaction is initiated, the funds will be deposited into the recipient's account within "two to five seconds". Currently, regular transactions between the two countries take "two business days".

SBI director Nobuo Ando stressed the need to improve existing remittance services, aiming to provide faster and lower-cost services for individual customers. He added:

In this experiment, Ripple was impressive in concept and even more so in practical application. In addition, as the Ripple network expands, we will reap better foreign exchange trading opportunities.

To achieve this goal, SCB, as the first bank in Thailand, also plans to use the Ripple blockchain to launch core remittance channels in North America, Europe and Asia Pacific.

As for the goal of launching this service, as Arak Sutivong, SCB's head of strategy, said, it is to "provide real-time payments for families who need to rely on foreign funds to maintain basic living needs, because time is of the essence for them."

Are blockchain bank transfers coming soon?

Ripple’s blockchain, the Ripple Consensus Ledger (RCL), has been used for a number of remittance experiments before, including an instant funds transfer between Spain and Mexico in April this year. In July 2016, a Ripple blockchain payment from Canada to Germany took 20 seconds, and in September, a cross-border transfer from Standard Chartered Bank took just 10 seconds.
It is worth noting that Ripple also established an interbank blockchain organization called the "Global Payment Steering Group" in September last year, whose members are the world's largest banks. The task of this working group is to create and maintain the rules of the Ripple ledger. Earlier this year, Japan's largest bank MUFG joined the working group, aiming to promote commercial international bank fund transfers through this blockchain by 2018.

Ripple called this blockchain remittance trial "the first commercial-grade remittance service completed through its blockchain."