Destination Tag

Overview

A Destination Tag lets one on-chain address serve many hosted accounts. The receiving exchange, merchant, or custodian maps each tag to an internal customer or payment record. The blockchain delivers funds to the shared address, while the platform uses the tag for off-chain crediting.

On XRP Ledger payments, the destination tag is a transaction field and can identify a beneficiary or business purpose. Services can require the field so payments without it are rejected instead of arriving without enough information for attribution.

The tag is not part of the classic account address, although an X-address can encode both values for easier handling. Applications should preserve the original address and tag separately in their data model even when displaying a combined representation.

A missing or incorrect tag can produce an unattributed deposit. The transfer may be valid and finalized on-chain while the platform cannot determine the intended recipient. Manual recovery can require proof from the sender and may not always be offered.

Destination-tag handling is one form of Reference-Based Matching and supports Transaction Attribution. Systems should validate the numeric range, reserve values without collision, display the tag prominently, and include it in refunds where protocol conventions require.

Tag issuance needs collision and privacy controls. Sequential tags can reveal customer counts or allow an observer to correlate activity. A service can generate unpredictable values while checking that each active tag is unique. The system should also define whether tags can be reused after a retention period and how refunds preserve the original routing information.