After a series of highly publicized pilots, three companies are now making commercial use of Ripple's xRapid product.
XRapid uses the XRP digital asset, using it as a "bridge currency" in cross-border payments, which according to the company reduces the cost and increases the speed of these payments by increasing liquidity.
The three companies – MercuryFX, Cuallix and Catalyst Corporate Credit Union – were announced by Ripple's CEO, Brad Garlinghouse, on the stage at Ripple's Swell Conference in San Francisco today, which marked the first time companies have marketed the product.
MercuryFX, which helps customers send and receive international payments; and Cuallix, which facilitates remittances between the United States and Mexico; had previously announced pilots using xRapid.
The Catalyst Corporate Credit Union, which provides a range of financial services to approximately 1,400 credit unions, mainly in the western and south-western United States, is a new partner for Ripple.
A number of other companies have tried xRapid in the past, including Western Union, MoneyGram, Viamericas and IDT. These companies are not putting xRapid into production at the moment, said Ripple SVP of Asheesh Birla at CoinDesk, but added: "We are still working on the next steps" with some of them.
The announcement is an important milestone for XRP, a digital resource created for the first time by Ripple's founders – although at the time the company had a different name – in 2012.
Ripple holds most of the existing XRP tokens, selling them continuously through its XRP II subsidiary (in Q2, for example, the company sold $ 74 million of XRP).
XRP is currently the third most important cryptocurrency for market capitalization, based on investors' wagering that Ripple's suite of products will eventually replace the current infrastructure for cross-border payments, including our and your accounts (which banks must pre-finance with local currencies) and the old SWIFT messaging system.
Speaking with CoinDesk, Birla outlined how the current system works:
"Today if you want to transfer money, let's just say in Mexico […] the ways to do it were built in the years & # 60; It has not really changed. "
In particular, he continued: "You have to open a bank account in Mexico and you have to deposit pesos in that bank account and then pay on the spot, and the whole process sometimes takes weeks and the establishment of an account bank it's a whole treasury operation that takes months to move forward. "
In contrast, xRapid processes cross-border payments via XRP, with the sending party inserting a fiat into a cryptocurrency exchange, converting it to XRP and converting XRP to the desired fiat currency of the receiving party.
Ripple recently announced three exchange partnerships to facilitate this process: Bittrex, for US dollars; Bitso, for Mexican pesos; and Coins.ph, for the Philippine pesos. Trade market makers, who are not affiliated with Ripple, act as counterparts for fiat-to-XRP trades.
In a recent interview, MercuryFX founder and director Alastair Constance said that xRapid is "a revelation", adding that it reduces the time it takes to send a payment from the United Kingdom to Mexico from two days to two minutes.
If xRapid resembles bullet trains, said Constance, the incumbent system – made up of SWIFT and correspondent banks – is like pushing oranges around in wheelbarrows.
Confusion around customers
As those who follow the enthusiastic raids of the XRP on social media know, perhaps the main thesis for investing in XRP is that it will eventually have a broad, if not universal, adoption by banks for cross-border payments (and perhaps other uses).
A number of banks have expressed interest in Ripple's xCurrent product and Santander has incorporated it into a mobile consumer app. But xCurrent does not use XRP, and Ripple has sent mixed signals in the past regarding the interest of banks in xRapid.
Birla told CoinDesk in a recent interview: "We created xCurrent as a product to start the banks, we will start using fiat transfers and then we will introduce the possibility of using digital resources via xRapid on xRapid at the top of xCurrent."
On the other hand, David Schwartz – who was Ripple's cryptographer chief before he became CTO in July – He said in March xRapid is "not addressed to banks".
However, in June, Garlinghouse predicted that "dozens" of banks would adopt xRapid by the end of 2019. Further mutifying the framework, Schwartz said only a week after banks could be slow to adopt distributed books, due to privacy issues and scalability.
Outside of the issue of the bank's adoption, Ripple's messaging has sometimes made it difficult to analyze who is putting its products in use and how.
A January press release said, "Ripple is proud to announce that two new partners – IDT Corporation and MercuryFX – will now use xRapid to quickly resolve retail remittances and corporate transactions."
IDT is a publicly traded telecommunications company.
That announcement did not specify that the companies were not using xRapid commercially, with the exception of a quote from an IDT official who said the company was "excited to drive" xRapid.
Following today's announcement that xRapid is "commercially available", it is clear, a posteriori, that MercuryFX was not using the product commercially.
Constance explained that the company used xRapid to process payments to charity in Mexico in what it called "a test phase".
Birla refused to say how or if Ripple is monetizing xRapid.
Constance of MercuryFX – asked if his company was paying for the use of the service – said: "We used the XRP ledger based on the fact that money is not important at the moment, it is the dream we are chasing ".
Tom Channick, Ripple's corporate communications director, said in an email that "xRapid is part of the RippleNet product suite, which is sold to financial institutions."
As noted above, Ripple continually sells XRP through a branch, so all other things being equal, an increase in the demand for XRP would increase Ripple's revenue.
Asked if XRP demand can be expected to increase due to the fact that xRapid is deployed commercially, Birla said:
"The xRapid product takes advantage of XRP, so if you are making a million dollars payment via xRapid, this is a million dollars of XRP you would need."
However, he noted that institutions like MercuryFX do not need to keep the XRPs themselves (according to Constance, however, MercruyFX holds XRP as an investment).
Rather, independent market makers who trade exchanges are those who need to keep XRP, Birla said.
XRP image through Shutterstock