Ripple positions itself as a company facilitating money transfers on a global scale. Several hundred financial institutions are utilizing the company’s technology to expand their services and find new customers.
Global Payments Need Improvements
The global payments industry is bogged down by several aspects. High costs and slow transfers are two of the most common issues customers have to deal with. Moreover, these traditional payment corridors are not always as reliable as one would like them to be.
Finding the reason for these drawbacks is not difficult. The current infrastructure utilized to send global payments is outdated, complex, and incredibly fragmented. In this modern day and age, there is a need for a unified, global system with ample liquidity. Ripple is one of the companies focusing its attention on bringing such a concept to life.
The Ripple Vision
As a payments facilitator, Ripple focuses on the business’ core aspects. The company wants to help companies extend their reach by providing new payment corridors and different ways to move money. All of this is done in an instant manner, which is of great benefit to customers all over the world.
The core hurdle to overcome is providing a reliable way of moving money globally. Ripple is building trust by eliminating payment failure from the equation altogether. Combined with its low-cost approach to improve overall efficiency for all parties involved, the company addresses the pain points in the global payments industry.
The Inner Workings of RippleNet
To create a global network of liquidity capable of facilitating money transfers, Ripple has created RippleNet. It is an ecosystem reliant on blockchain technology to power global payments in several dozen currencies. As the RippleNet ecosystem continues to expand, there will be more liquidity and efficiency for all parties involved.
The most intriguing feature of RippleNet is its On-Demand Liquidity, or ODL. This is an alternative way of conducting global payments. Rather than pre-funding transactions through fiat reserves, this solution utilizes the native XRP asset to bridge two currencies in mere seconds. As a result, payments are sent quickly and receive in a local currency without friction.
Explaining the XRP Asset
To further facilitate global payments, Ripple created a digital asset by the name of XRP. This asset’s sole purpose is to improve upon the money transfer industry’s core aspects in every way imaginable. This is the same asset powering Ripple’s On-Demand Liquidity and serves as a bridge between different currencies.
The XRP asset runs on top of the XRP ledger. It is used by Ripple to power innovative technology. All RippleNet customers can opt to choose XRP to source liquidity in cross-border money transfers. In doing so, these companies will be able to offer instant settlement, lower exchange fees, and efficient use of their capital.
Potential use cases for this native asset transcend the money transfer industry. It can equally be utilized for e-commerce, peer-to-peer services, and micropayments. The technology powering XRP and its own ledger are both open source. Developers are more than welcome to experiment with this technology and built new services or products accordingly.
It is also worth noting how the XRP ledger can process 1,500 transactions per second. In an ideal situation the ledger will be capable of rivaling Visa’s throughput of 65,000 transactions per second. The scalability of solutions like these is crucial in the global payments industry. It also takes three to four seconds to move money across the XRP ledger, compared to between three and five days when using traditional systems.
Who is Using it?
Having a powerful ecosystem is one thing, but getting companies to use it is a different matter. In the case of Ripple, there are over 300 financial institutions making use of its technology and services. All of these players are part of RippleNet, and can tap into liquidity solutions powered by XRP.
Among clients utilizing what Ripple has to offer are some major financial institutions. partners include Santander, InstaReM, SBI Remit, MoneyGram, PNC, American Express, and Interbank, to name a few.
The SBI Ripple Asia Venture
Ripple’s success has not gone by unnoticed. SBI Holdings is very intrigued by what the company has to offer. As a result, the SBI Ripple Asia venture was founded a few years ago. It encompasses a conglomerate of Asian – primarily Japanese – financial institutions utilizing Ripple technology and the XRP ledger. Asia is a very important region for global payments and notes very high yearly volumes.