Citi Debuts Token Services for Cash Cross-Border Payments Tool

Citi says its Token Services for Cash program has gone live after a pilot phase.

The new commercial solution, announced Thursday (Oct. 10), processes multimillion-dollar transactions and offers clients “24/7, always-on” cross-border liquidity and payments between participating Citi branches. 

The tool was created with a private and permissioned blockchain that is solely owned and managed by Citi, with clients not required to hold or manage any tokens to access the services.

“The continued progress of Citi Token Services is a key component of Citi’s pursuit of real-time, always-on services for its institutional clients,” Ryan Rugg, head of digital assets, treasury and trade solutions at Citi, said in a news release.

“By using distributed ledger technology (DLT) and smart contracts, Citi has created a patented programmable payment and liquidity platform, which will reduce costs and streamline processes.”

According to the release, Citi initially piloted the solution between Singapore and New York, and continues to explore onboarding transactions between other branches.

Also Thursday, Citi announced that its Token Services for Trade tool had marked a milestone by facilitating pilot transactions in collaboration with a pair of shipping agents, CB Fenton and GAC Panama Shipping.

“These pilot transits are the first real-world use of Citi Token Services for Trade in global shipping,” the release said. “By replacing transactions such as guarantees and letters of credit with smart contracts backed by tokenized cash, Citi Token Services for Trade will bring trade finance into an increasingly real-time world.”

As PYMNTS wrote last month, blockchain technology can solve many of the problems connected to traditional cross-border payment systems. 

“For example, consumer cross-border payments often incur bank fees averaging over 11%, which can erode the value of smaller transactions,” that report said. 

“B2B payments are impacted, with fees averaging 1.5% and processing delays up to several weeks. Nearly half of Citibank’s corporate clients identify high costs as a pain point, and 59% cite slow speeds as an issue.”

Blockchain technology addresses the inefficiencies of traditional cross-border payment systems by using DLT to allow direct transactions with no intermediaries, reducing costs and speeding settlement times, with transactions potentially completed in seconds rather than days.

Research by PMNTS Intelligence finds that permissioned decentralized finance (DeFi) could lower transaction costs by up to 80% compared to traditional methods. 

“Features like automated recordkeeping and smart contracts enhance transparency and efficiency, while stablecoins, pegged to fiat currencies, mitigate volatility concerns,” PYMNTS wrote. “Visa and Shopify have partnered separately with Solana to test stablecoin payments, highlighting blockchain’s growing acceptance.”