5. A SWIFT message is sent with the transfer details to the receiver’s correspondent bank who debits the receiver’s correspondent’s Nostro account and credits its own account – The US correspondent bank takes a fee for facilitating the transfer
6. A SWIFT message is sent to the receiving bank with the transfer details. The receiving bank debits its correspondent bank account and credits its own account
7. The funds are received in US
There are multiple issues with traditional Cross-Border Payments – Cost, Time, Transparency, and Errors. The average costs for a bank transfer are 11.18%  for low-value payments while typical business to business payments can cost up to $30USD. Transactions can take between 3-5 days to settle , and the error rate of international transfer is around 5%.  World Bank  Each step takes time and as most international banks operate different time zones; money can stay idle waiting for recipient banks’ business hours
The cost and complexity of holding and maintaining Nostro accounts is one reason why only a handful of banks can process global transactions. Nostro accounts are simply unsustainable for most organizations, creating the need for correspondent banks. These banks act as intermediaries for smaller and medium-sized banks and have partnerships with multiple international banks. When a money transfer is requested, the SWIFT system links banks via correspondent banks and instructs each bank along the way of which transaction to fulfill. The capital requirements for holding idle money in many countries would be prohibitively expensive. They also must be actively managed to ensure balances are commensurate with transaction volume. Speed and volume are crucial considerations. The faster the transaction, the more a sender is protected from volatility risks and the faster the recipient receives fully settled funds. High throughput allows for a more stable volume of exchange for all market participants.
Digital assets are cryptographically secured tokens that store value and can be transferred between two parties without the need for central counterparty (corresponding banks). A digital asset use can take the place of Nostro accounts and offer on-demand liquidity. This is possible because the digital asset serves as a universal currency, and payments can be instantly made in any currency. This capability not only lowers the cost of the overall transaction, but it can speed up the exchange in real-time. Banks and payment providers can then free up the dormant Nostro accounts around the world. Even better, banks, and payment providers that would usually be locked out of transacting on their own, can now engage in international payments directly.
Targeting the money transfer pain points, Ripple is using a blockchain-based network to improve the way transfers are done. Ripple is a real-time gross settlement system (RTGS), currency exchange, and payment network, built specifically for the direct transfer of assets. Ripple introduced XRP as the digital token that can act as a bridge currency to facilitate direct asset transfers between parties. XRP transfers are instant, extremely inexpensive (fractions of a cent), and can be done to any entity on the RippleNet willing to accept the token. Ripple’s xRapid solution uniquely uses XRP to offer on-demand liquidity.