Distributed Ledger Payment Rail for Near-Real-Time Cross-Border Settlement

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Solution Overview

Problem

Existing cross-border funds transfer systems are inefficient, costly, and slow due to reliance on correspondent banking relationships, payment networks like SWIFT, and manual reconciliation processes, leading to high fees, delayed transactions, and inefficient management of nostro/vostro accounts.

Innovation Solution

A distributed ledger technology (DLT)-based system that facilitates cross-border payments by using digital cash states recorded on a distributed ledger, eliminating the need for SWIFT messages and enabling real-time settlement, reconciliation, and compatibility with existing banking systems.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Reliability

If correspondent banking relationships and payment networks like SWIFT are used for cross-border transfers, then funds can be transferred between banks in different countries, but the process becomes slow, costly, and requires manual reconciliation

Engineering Contradiction:

Improvecross-border transfer capabilityVSAvoidtransaction settlement time

Core Design Contradiction:

ReliabilityVSLoss of time

Solution Approach 1:

The patent replaces the mechanical system of correspondent banking relationships and SWIFT message routing with a distributed ledger technology-based payment rail. This digital infrastructure enables direct peer-to-peer settlement between sending and receiving banks, eliminating the need for intermediary correspondent banks and manual reconciliation processes, thereby reducing transaction time from days to near-real-time

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The patent introduces a distributed ledger network as a new intermediary layer that enables direct settlement between banks. Instead of using traditional correspondent banks as intermediaries, the distributed ledger provides a shared digital record-keeping system that allows sending and receiving banks to settle transactions directly, eliminating the multi-hop routing through correspondent banks

Inventive Principle:

Principle #24Intermediary (Mediator)

2Reliability

If correspondent banking relationships are used for cross-border transfers, then funds can be transferred between banks in different countries, but high fees are incurred due to multiple intermediaries

Engineering Contradiction:

Improvecross-border transfer capabilityVSAvoidtransaction cost

Core Design Contradiction:

ReliabilityVSLoss of energy

Solution Approach 1:

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The patent extracts and removes the intermediary correspondent banks from the cross-border payment chain. By using a distributed ledger network, the system eliminates the need for sending and receiving banks to maintain costly correspondent relationships, directly connecting them through a shared digital ledger that enables settlement without intermediaries

Inventive Principle:

Principle #2Taking out (Extraction)

3Reliability

If manual reconciliation processes are used in cross-border transfers, then transactions can be settled between banks, but the process becomes inefficient and requires significant manual intervention

Engineering Contradiction:

Improvetransaction settlementVSAvoidreconciliation efficiency

Core Design Contradiction:

ReliabilityVSProductivity

Solution Approach 1:

The patent replaces manual reconciliation processes with automated digital reconciliation enabled by distributed ledger technology. The shared ledger provides a single source of truth that both sending and receiving banks can access, automatically reconciling transactions in real-time without manual intervention, thereby dramatically improving reconciliation efficiency and reducing operational costs

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

Solution Approach 2:

The distributed ledger system enables self-service reconciliation where the network automatically maintains consistent records across all participating banks. The system autonomously reconciles transactions through its consensus mechanism and shared state, eliminating the need for manual reconciliation efforts by bank personnel

Inventive Principle:

Principle #25Self-service

Data Source

PatentUS20250272667A1Systems and methods for cross-border payments via distributed ledger-based payment rail

Publication Date: 2025.08.28 WELLS FARGO BANK NA

AI summary

Systems and methods relating to a distributed ledger-based payment rail are provided. A computer-implemented method includes determining whether a sending financial institution of a sender of a funds transfer and a receiving financial institution of a recipient of the funds transfer each operates a node on a permissioned distributed ledger network. The method further includes routing a funds transfer request message to the permissioned distributed ledger network in response to determining that the sending financial institution and the receiving financial institution each operates a node on the permissioned distributed ledger network. The method further includes destroying, by an issuer, the cash states in response to the recipient redeeming cash states associated with the funds transfer.