The Ripple Effect – Can The Silicon Valley Decentralised Payments Co. Build On This Week’s New Client Wins?

The Ripple Effect – Can The Silicon Valley Decentralised Payments Co. Build On This Week’s New Client Wins?

California based blockchain instant payments platform Ripple has emerged as the leader of a vanguard of decentralised ledger payments solutions that is threatening the hegemony of current FX payments solution incumbent SWIFT.

SWIFT has dominated international payments of all kinds since the 1970s, working with no fewer than 11,000 financial services companies, including all major high street and investment banks.

But many banks, including Santander, the Central bank of Saudi Arabia, Brazil’s Itaú Unibanco, and remittance services such as Singapore based Instarem have all begun trialling Ripple, which promises faster delivery times, and potentially cheaper transaction fees.

This week, Ripple has announced that its service will go live with three financial institutions: payment providers Mercury FX and Cuallix, and cooperative financial firm Catalyst Corporate Federal Credit Union. All three will use Ripple’s proprietary service XRapid, which operates using a cryptocurrency, XRP.

Essentially, XRP acts as a go-between that can be used to convert, say, Mexican Pesos, into XRP, for delivery to the US, where the cryptocurrency is then converted into dollars. There are 100 billion XRP tokens in existence, of which Ripple owns 60%, with 55 billion tokens locked up in escrow to ensure there is sufficient supply at all times.

Ripple has been under pressure to deliver the “real thing”; a live payments service: and the company’s Senior Vice President of Product, Asheesh Girla, said this week at Ripple’s annual conference that: “I’m really excited to bring the product into the market at a time when there is a lot of skeptcism about digital assets and their real use case,”

“Here’s something where we’re finding a ton of value and providing a ton of value to our customers using digital assets to move money more efficiently.”

The price of the cryptocurrency is trading some way down from it’s all time high of $3 dollars, at around 60 cents, reflecting the generally poor performance of cryptocurrency in 2018, after a stellar end to 2017. If Ripple is to emerge as a genuine rival to SWIFT, it needs to start signing up big banks sooner rather than later.

Ripple is also marketing a second product, X-current, which is being used by Santander via its OnePay FX solution. Ripple says it has more than 120 clients signed up to its services, and has also doubled its headcount, to 300 people.

XRP is, at the time of writing, the world’s third largest cryptocurrency by market value. It is worth $18.7bn, just behind ether, $23.9bn, and a long way short of bitcoins $113bn market cap.

Ripple launching a live service for the first time has certainly gone down well with the long-suffering crypto community, who are hailing the news as a seismic shift in the battle to bring blockchain based services into the mainstream banking world. In the past, Ripple has worked with the likes of MoneyGram and Western Union – 2 of the biggest international payments names in the business.

So far, however, CEO Brad Garlinghouse and the Ripple team will have to content themselves with providing services to relative international money transfer minnows. You have to start somewhere, but Garlinghouse and co may be a smidgen disappointed that, although they can now definitively say they have started, it is a little later, and on a smaller scale, than many might have predicted a year ago, when everything in the cryptocurrency was a healthier shade of rosy.

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