Ripple: The need for digital payments is growing

• Ripple (XRP) has revealed that it will focus its new focus on the need for remittances and payments by SMEs and therefore expects the volume of On Demand Liquidity transactions to increase.
• Ripple will open new corridors this year and expects unprecedented support for RippleNet.

Ripple revealed that the company will shift its focus to the Demand Liquidity payment solution next time around. The publication claims that the crisis caused by the coronavirus pandemic has brought a “new normal”. As a result, the need to digitize cash was highlighted and there was an increase in demand for electronic payments.

Ripple says that during the current crisis some countries have seen an 80% increase in digitization. Of this figure, digital remittance payments increased by 40%. This shows, according to Ripple, that there is a strong demand for global digital payments that cannot be met by the limitations of the current system:

The underlying infrastructure is compartmentalized and complex, resulting in significant delays and high transaction fees.

This is why the On Demand Liquidity payment solution presents itself as an alternative. According to the publication, ODL uses the XRP digital token which is much cheaper, faster, eliminates middlemen and is affordable compared to pre-funded accounts:

The benefits of ODL for the elimination of pre-financing are particularly important during times of crisis due to the exposed risk and increased volatility.

Furthermore, the publication refers to a specific case where ODL was crucial. According to Ripple, the value of the Mexican peso fell by 20% against the USD during the crisis. Ripple’s customers using ODL were better protected from this phenomenon due to its speed in making cross-border payments.

Ripple puts a new focus on SMEs

For these reasons, the payment solutions company has decided to continue supporting low-cost, high-frequency individual transactions. Ripple stated:

(…) We are reducing the emphasis on large cash payments, which are traditionally used to finance businesses and services in the absence of real-time transfers, to support low-value individual transactions, addressing the growing need for remittances and payments to SMEs. This could reduce the overall volumes of ODL transactions.

Despite this, the company expects significant growth in ODL adoption and increased business support for RippleNet. Ripple has announced that it will open new payment corridors in 2020, but has not provided further details.

In the crypto community, the announcement was met with criticism. Some users have claimed that the treasury payments referred to by Ripple were made to MoneyGram. As reported by CNF, a possible purchase of MoneyGram by Western Union may be in negotiation. This could lead to reduced payments and reduced transaction volumes. A member of the community She said:

ODL volume falls after rumors about Western Union’s acquisition of mg. Or maybe Ripple doesn’t want to pay more incentives to mgi (MoneyGram investors). We’ll see how it turns out.