Ripple Labs announced yesterday it has joined the NACHA Payments Innovation Alliance – a move it says will increase its influence within the financial and payments industry, as well as help promote new technologies in the space.
NACHA, previously the National Automated Clearing House Association, is a not-for-profit industry body of financial institutions that serves as trustee for the Automated Clearing House (ACH) network, the backbone for electronic payments and movement of money and financial data in the US.
The ACH Network is similar to the SWIFT network that facilitates international money movements.
Although Ripple Labs is a software company rather than a financial institution per se, it provides an open-source base platform “that resides at the bottom of the payment stack” for others to build upon.
Ideally, the company sees itself as replacing some of the most basic infrastructure functions of the ACH network:
The company posted the following statement on its blog:
“Our membership with the NACHA Alliance provides us with further opportunity to further our mission of working with everyone within the industry to help drive innovation around the movement of money.”
Ripple Labs has always claimed the Ripple protocol is perfectly suited for use by financial institutions and enterprise, saying its involvement has been a long-standing drive by the company.
Patrick Griffin, the company’s EVP of Business Development, said:
“Ripple is an Internet protocol that enables financial institutions to securely transfer funds in any currency in real time. Our enterprise focus is to help banks, money transmitters and clearing houses use Ripple for bilateral settlement and straight through processing.”
“For developers, the protocol is free and open. Developers can build new payment services or tools to migrate legacy payment systems to Ripple. By empowering these different stakeholders, we can enable the world to move and exchange value like information is shared today.”
Recent announcements and improvements reflect this stance. On 4th June, the company announced it was working to add features to its protocol that would empower gateways to freeze non-XRP balances they have marked for further investigation if they suspect related accounts have been hijacked or are engaging in suspicious behaviour.
The new features are part of Ripple Labs’ commitment to helping gateways with regulatory compliance and giving those gateways tools to better manage compromised and suspicious balances, according to the Ripple wiki.
The protocol will soon gain new messaging and identity features, plus other tools to allow stakeholders to identify such suspicious activity and communicate it to other users who wish to avoid those accounts.
‘Suspicious activity’ would involve money laundering, fraud, or other attempts to manipulate digital currencies and their networks.
Stakeholders would still have the freedom to decide whether or not to implement the tools and enforce risk controls, but could highlight the increased compliance in advertising to potential new customers.
Ripple Labs says it is working on these improvements in order to be more regulation, compliance and law-enforcement friendly – words that will be reassuring to the traditional financial industry.
NACHA represents over 11,000 US financial institutions who fund the organization either directly or via regional associations. The ACH Network itself, which is separate, moves about 22 billion transactions and $39tn (yes, trillion) annually.
NACHA members cooperate to set private sector operating rules including risk management and security of the network, with a mission “to facilitate the expansion and diversification of electronic payments on the ACH Network.”