Ripple (XRP) – Today’s current bank transfer across foreign borders takes 2-3 days. However, this could quickly change forever as Ripple sets out to make sending money one frictionless experience. Yesterday in a press release, Ripple announced a successful pilot run of their xRapid service, which, according to the pilot, saved financial institutions 40-70% in transaction fees when using the xRapid network instead of traditional methods.
The transfer of XRP across borders occurs in just a few seconds, but transferring XRP for fiat currencies takes a bit longer. The pilot tested payments between the U.S. and Mexico. (The US bank sends USD to a gateway exchange where it is then converted into XRP. From there, the XRP is sent to a gateway in Mexico where it is then exchanged of Pesos.) Payments with the use of Ripple took around two minutes; quicker than the 2-3 day average we are used to when dealing with cross-border payments.
This pilot reassures us that digital assets will play a key role in the future; helping banks safely address some of the “structural inefficiencies of legacy settlement infrastructure.”
Ripple is consistently making new deals and partnerships with major financial institutions across the globe, as more and more banks and financial institutions adopt Ripple as their preferred way to perform business operations. The centralized digital currency company has partnered with more recognizable names than their competition and offers something they all don’t. Many believe XRP to be currently undervalued, as it has dramatically declined from its $3 high. As Ripple gains new clients, market cap and value will increase.
Some of the biggest money transfer companies in the world are using Ripples xRapid service. Announcements with companies like MoneyGram, MercuryFX, and IDT Corporation have confirmed usage of XRP in payment flows through xRapid.
xRapid is for payment providers and other financial institutions who want to minimize liquidity costs and also improve their customer experience. Payments into emerging markets often require pre-funded local currency accounts around the world. This makes liquidity costs high. xRapid dramatically lowers the capital requirements for liquidity. Ripple uses XRP to offer on-demand liquidity.
Banks use xCurrent to process global payments for their customers because the xCurrent platform provides instant and certain settlement and is primarily Ripple’s “enterprise” software solution. This service allows banks to instantly settle cross-border payments with end to end tracking.
“Central banks around the world are leaning into blockchain technology in recognition of how it can transform cross-border payments, resulting in lower barriers to trade and commerce for both corporates and consumers,” says Dilip Rao, the global head of infrastructure innovation at Ripple.
XRP is trading at $.70 today. The price is currently below the bearish trend line at $.78. This level acts as resistance for Ripple with key support at $.72. The MACD on D1 is in the positive territory, however, it is looking like it is ready to enter the negatives.
Ripple bills itself as “the world’s only enterprise blockchain solution for global payments.” Other institutions in this industry are following are lead.
SWIFT, otherwise known as Society for Worldwide Interbank Financial Telecommunication, is the primary network utilized by banks worldwide to execute international monetary exchanges. Currently, SWIFT is used by more than 10,000 financial institutions in 212 different countries.
TransferWise compares SWIFT to a connecting flight at an airport. Sometimes to fly from one airport to another, you have to travel via connecting flights – SWIFT works in the same way: If a US bank wants to send currency to a Mexican bank, the Mexican bank must have USD, and the US bank has to have Pesos. The same goes for banks worldwide – although, not all banks have every type of currency. Sometimes, the US bank must first send funds to another bank before being ultimately routed to Mexico.
Evidently, it can be a lengthy and complicated process. Ripple describes itself as a global exchange for anything of value and XRP acts as a universal medium of exchange for cross-border payments. If XRP is adopted by institutional banks and governments, it could drastically reduce international transaction times and conversion fees and we could predict a high price for the XRP token.
Although Ripple is quick, the protocol is still heavily dependent on third party intermediaries to facilitate the exchange of XRP into fiat currency. Ripple has stated: “The portion of the transfer that relies on the XRP Ledger takes two to three seconds, with the additional processing time attributed to movement across the intermediary digital asset exchanges and local payment rails.”
This speedy coin will possibly revolutionize banks as we know them today. While it is hard to tell whether the rest of 2018 will be a bear or bull market, it is obvious that some coins have a stronger lead than others. XRP is one of those coins. The price is currently at a strong dip.