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Ripple’s official documentation reveals how its On-Demand Liquidity (ODL) system handles payments that fail after a sender has already converted fiat currency into $XRP.
The process allows ODL (now Ripple Payments) to convert the $XRP back into fiat and move the funds into a Sender Segregated Account (SSA) at the receiving institution.
This gives the sender a way to recover the funds when the $XRP transfer succeeds, but a problem prevents the payment from reaching its final destination.
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The documentation confirms how Ripple has built a recovery process into ODL to deal with problems that can occur during cross-border payments. Essentially, the system can recover funds and make the funds available for another payment instead of leaving them tied up after a failed transaction.
For context, ODL allows financial institutions to move money across borders without having to keep large amounts of funds in accounts denominated in different currencies. The system uses $XRP as a bridge between the sender’s currency and the recipient’s currency.
In a normal transaction, the sender’s fiat currency first converts into $XRP. The $XRP then moves across the $XRP Ledger before the receiving side converts it into the destination currency and completes the payment.
This allows $XRP to act as a temporary bridge instead of being an asset that the payment provider needs to hold for an extended period.
However, a transaction can still run into problems after the $XRP has left the source side but before the recipient receives the final fiat payment. Ripple’s documentation addresses this situation through its failure-conversion process.
When a payment reaches a failure point covered by the system, ODL can first attempt to complete the transaction again. The retry process depends on where the failure occurred.
For instance, if the $XRP has already left the source exchange but the receiving side has not confirmed the deposit, ODL can retry the transaction every 30 minutes for up to 12 hours. Other failure points follow different retry periods.
If the system cannot complete the payment after the applicable retries, it converts the $XRP into fiat. ODL then moves the resulting fiat funds into the sender’s SSA at the receiving institution.
The SSA acts as a dedicated account for funds that belong to the sender. According to Ripple’s documentation, once the account receives funds through failed conversion, it will function as a nostro account for the sender.
This gives the sender access to recovered fiat, instead of leaving the funds in $XRP after the failed payment.
The recovery process does not just move the funds into an account and leave them there. Ripple’s system can use the SSA balance when the sender starts another payment.
When the sender requests a new quote, ODL checks the available SSA balance first. If the balance can cover the new payment, the system uses those funds instead of starting another full ODL transaction.
If the SSA balance does not cover the payment, ODL then uses the normal liquidity path and sources the remaining funds through the regular process.
In this system, successful payments continue to use $XRP as an on-demand bridge, but failed payments produce a temporary fiat balance that supports future transactions.
Ripple also provides different ways to handle foreign-exchange requirements for SSA funds. The available options include Sender FX, Receiver FX, and No FX, depending on how the participating institutions handle currencies and reconciliation.
It is important to note that the failure-conversion feature is not a new ODL launch. Community figures like Eri recently brought it back to light amid renewed conversations surrounding ODL’s use of $XRP.
ODL’s payment volumes have also grown as more financial institutions adopt Ripple’s cross-border payment system.
A DAS Research report found that ODL processed $1.3 billion in payments in Q2 2025, representing a 41% increase from the same quarter a year earlier.
More than 300 financial institutions have continued to use the system, including SBI Holdings, Santander, and Tranglo. Santander also recorded a 40% increase in its cross-border payment volumes through ODL in Q3 2025.
