26 May 2018
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Ripple claims success in first pilot trials of XRP for cross-border payments

10 May 2018  |  13385 views  |  6 Outsourcing

Ripple is claiming promising results from the first pilot trials by remittance platforms of its digital asset XRP as a medium of exchange.

While big banks continue to shy away from the use of XRP as a form of reserve currency in funds transfers, Ripple appears to have found a sweet spot for the adoption of xRapid in the $569 billion remittance market.

IDT, MercuryFX, MoneyGram, Viamericas and Cuallix have all taken the plunge with xRapid and XRP, while a recent agreement with Fleetcor-owned B2B international payments provider Cambridge Global Payments has opened a new avenue - commercial payments - for the digital asset.

Ripple says the first pilot tests resulted in 40-70% savings on FX exchange rates for participating platforms, and faster settlement of transactions, cutting the time taken to effect a cross-border payments from two-to-three days to just minutes. The leg of the transfer that touches the XRP Ledger only takes 2-3 seconds with the additional processing time happening while the transfer moves across the intermediary digital asset exchanges and local payment rails.

“It’s encouraging to see positive xRapid results because they validate what many in our industry already know: certain digital assets have utility,” says Asheesh Birla, SVP of product at Ripple. “XRP’s utility lies in its speed and scalability, which makes it the perfect fit for cross-border payments. The XRP Ledger can send 1,500 transactions per second.”

Paul Dwyer, co-founder and CEO of money transfer outfit Viamericas was initially circumspect on the potential of XRP and concerned about the impact of volatility on prices, but now adopts a more upbeat tone following tests in the US to Mexico trade corridor.

"It’s clear that xRapid can lower liquidity costs while increasing payment speed and transparency in a way that facilitates rigorous compliance controls," he says. "We believe that digital assets like XRP will play a key role in the future of cross-border payments, helping to safely address some of the structural inefficiencies of legacy settlement infrastructure as their adoption grows. We look forward to exploring next steps with Ripple.”

Comments: (6)

A Finextra member
A Finextra member 10 May, 2018, 17:57

Hallo, I'm not sure I understand hoiw FX costs are lower using Ripple and XRT since there is a double FX exchange in the money transfer, fron the first currency to XRP, and from XRP to the second currency. What am I missing? (just trying to understand.. :-))

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Behzod Sabirov
Behzod Sabirov - Sanscrit LLP - Almaty 11 May, 2018, 11:26

I think the 40-70% savings are mainly comprised of transfer fees savings, because XRP/fiat rates are very close to fiat/fiat rates.

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Salman Amjad
Salman Amjad - Bank - Saudi Arabia 11 May, 2018, 12:36 In an established market place the XRP/fiat couls be near fiat/fiat, but that’s not the case as yet. The market infrastructure is yet to evolve. IMO the savings would be from holding cost of liquidity for Banks, wherein they would have to maintain minimal nostros and as a result could offer a competitive rates to its customers.
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Behzod Sabirov
Behzod Sabirov - Sanscrit LLP - Almaty 11 May, 2018, 12:43

Well, Salman, banks have to maintain XRP nostroes (a kind of) as well. And those XRP's come from exchanging fiat into XRP. So I think it does not make a big difference what kind of nostro to hold. Ripple should have elaborated more on what those savings actually are.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 11 May, 2018, 13:30

I've heard of popular cryptowallets charging as high as 15% fees for BTC-to-ETH transfers. I find it extremely hard to believe that a Fiat1-to-Crypto-Fiat2 transfer will be 40-70% cheaper than a Fiat1-to-Fiat2 transfer. But I tip my hat to these crypto companies for their phenomenal ability to spread their outlandish claims far and wide.

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Bob Lyddon
Bob Lyddon - Lyddon Consulting Services - Thames Ditton 11 May, 2018, 15:25

The bit of this that I find particularly underwhelming is that "the leg of the transfer that touches the XRP Ledger only takes 2-3 seconds with the additional processing time happening while the transfer moves across the intermediary digital asset exchanges and local payment rails". 2-3 seconds is slower than SWIFT MT, and SWIFT payments also have to go across "local payment rails" but do not need to go through any "digital asset exchanges". SWIFT Global Payments Initiative can cut the end-to-end timing to minutes if the banks in the respective payment chain are geared up, and if they aren't geared up for SWIFT payments they won't handle any Ripple payments that come to them along the "local payment rails" any quicker.

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