Ripple’s business model has long been touted as an efficient solution for conducting cross-border payments, a field that is currently dominated by SWIFT. SWIFT’s archaic technological standards have often come under scrutiny from many in the community, with one of its most aggressive critics being the San Francisco-based blockchain firm, Ripple.
SWIFT’s ability to innovate has been a matter of debate for years now and Ripple has never shied away from pointing out the inconsistencies plaguing the international money transfer network with numbers and figures.
However, Martin Walker, Director of Banking and Finance at the Center for Evidence-Based Management, has questioned Ripple CEO Brad Garlinghouse’s allegations about SWIFT having a 6% error rate. The hypothesis of Walker’s paper was to verify if Garlinghouse’s statement, “6% of all SWIFT transactions require human intervention,” was true.
Garlinghouse has highlighted SWIFT’s error rate on a number of occasions, including at the Money 20/20 Asia conference in 2018, where he said,
“SWIFT’s published error rate is six percent. Now, I will talk to corporate treasury people and they will actually tell you it is higher than six per cent but even the six percent..”
In fact, Ripple’s ‘6% error rate’ claim was based on a 2014 paper authored by two independent payment experts. Walker contacted one of the authors and came to the conclusion that,
“The error rate referred to a mathematical model the authors had created to identify whether participants on the SWIFT network were core or peripheral parts of the network. The error rate referred to the accuracy of the model not the rate of errors in messages. In other words, the ‘six percent error rate’ was totally irrelevant.