Cross-border payments often face high fees, bureaucracy, and slow processing speeds, even in today’s financial world. Ripple is solving these problems with its XRP cryptocurrency and the technology that goes with it.
Ripple Technology and the Use of XRP
The decentralized infrastructure of Ripple enables instantaneous cross-currency transfers. Key features of the XRP cryptocurrency and Ripple technology include:
● Transaction Speed: XRP transactions are processed within 3-5 seconds, faster than regular bank transfers.
● Low fees: Transfers using XRP have lower fees than traditional financial systems, which attracts large financial institutions.
● Scalability: The Ripple network can handle a considerable number of transactions, making it resilient even under heavy loads.
These qualities enable financial institutions to lower transaction costs and processing times, making XRP an attractive option for cross-border payments.
Expanding Ripple’s Global Presence
Ripple partners with over 100 financial institutions through its RippleNet platform. Santander (USA), Canadian Imperial Bank of Commerce (Canada), and SBI Remit (Japan) are major players. Notable banks also include Itaú Unibanco (Brazil), SEB (Sweden), and Kotak Mahindra Bank (India). While these banks are using Ripple technology to speed up cross-border payments, it is unclear whether they are using XRP for settlements. RippleNet’s main priority is to create a more efficient infrastructure for international transactions without relying on the Ripple token.
To improve its foreign exchange (FX) services and multi-currency accounts, Deutsche Bank has teamed up with Ripple backer Keyrock. While the group is focused on Ripple’s technology, its token’s use in settlements remains less clear.
To strengthen its position in the global market, Ripple is taking many strategic actions:
● Obtaining Regulatory Approvals and Licenses: In December 2024, the New York State Department of Financial Services (NYDFS) approved Ripple to issue the RLUSD stablecoin, pegged to the US dollar. This decision highlights the company’s commitment to regulatory compliance and expansion in the United States.
● Strategic Partnerships: Ripple is actively working with financial institutions across the globe. For example, the National Commercial Bank of Saudi Arabia improved the quality of its cross-border payments by joining the RippleNet network in September 2018.
● Tech Acquisitions: In May 2024, Ripple paid $250 million for crypto startup Metaco. The acquisition was intended to multiply the company’s product line and strengthen its position in the international market.
● Presence to be expanded in strategic areas: To strengthen its position in the Asia-Pacific region and provide financial institutions with access to its technology, Ripple opened offices in Mumbai and Singapore in September 2017.
Benefits of Using XRP in Cross-Border Payments
Using XRP in international transfers provides several advantages:
● Instant transaction speed: XRP transactions are completed in seconds, significantly reducing waiting times compared to regular bank transfers.
● Minimal costs: XRP transfer prices are significantly lower, which attracts both private and business users.
● Scalability: Due to its ability to handle a high volume of transactions per second, the Ripple network provides both stability and reliability.
● Regulatory Compliance: Ripple is actively working to obtain licenses and comply with regulations in multiple jurisdictions, which increases the trust of financial institutions.
A great example of XRP’s capabilities is the transaction that allowed Arrington Capital to move $50 million into the cryptocurrency, which took place in just three seconds and cost just $0.30.
Mastercard CEO Claims Ripple Could Become Alternative to SWIFT. In addition, Mastercard is working with Ripple to explore the possibility of including XRP in the SWIFT system. The goal is to improve the efficiency of money transfers and streamline transactions between countries. Despite these agreements, most organizations use Ripple’s blockchain platform rather than using XRP directly for settlements.
The Bank of Japan aims to fully integrate the Ripple token into its payment system by 2025, allowing customers to make transactions with it.
How Small Businesses Can Use XRP for International Payments
- Paying Suppliers and Contractors: Small businesses working with low-cost suppliers can use XRP to make fast, low-cost payments without bank fees. With the XRP price currently at $2.42, merchants can convert payments into the desired currency faster without incurring significant fees.
- Receiving International Payments: Businesses serving customers outside the country can accept payments in XRP and convert them into local currency immediately.
- Money Transfers for Remote Workers: Startups and independent contractors may swiftly pay their remote employees worldwide thanks to XRP.
Benefits of XRP for Entrepreneurs
● Save on fees: XRP reduces the cost of traditional international transfers to 3-5% of the payment amount.
● Faster Turnaround Time: Businesses can get money from customers faster using instant payments.
● Access to the International Market: Using XRP allows businesses to operate outside of traditional banking systems
Conclusion
With its technological advantages and strategic initiatives, Ripple and its cryptocurrency XRP play a significant role in cross-border payments by providing cost-effective, fast, and reliable solutions for international transfers.
Although XRP is considered the leading digital asset for cross-border payments, banks have not used it directly for settlements. Deutsche Bank and Mastercard use the Ripple blockchain but have not yet chosen XRP as their primary means of payment.
The company continues to expand its presence and partnerships with global financial institutions, highlighting its desire to disrupt the traditional financial system and improve customer service.