Anyone who has tried to send or receive money internationally knows that historically it has been a long, drawn-out, complicated, and often painful process. In our last discussion on cross-border payments, we showed how this fragmented landscape is being redefined by the power of ISO standardization and the fresh technology approach of RippleNet.
Today, cross-border payments are on the cusp of further transformation. Blockchain technology and digital assets like XRP can help enable a more frictionless cross-border payment experience for both senders and receivers.
At Ripple, our mission is to provide a better payment experience and enable greater economic opportunity for everyone, everywhere. We work with financial institutions to modernize legacy systems using blockchain and digital currency.
Through RippleNet, each bank, financial institution, and payment provider connects in real time to a global network that rigorously adheres to the ISO2022 standard. In doing so, we enable these organizations to send and receive payments on behalf of their customers and between each other instantaneously, with finality and transparency — regardless of the amount of money or currencies that need to be sent.
In addition to tackling the problem of inefficient transaction time, the issue of pre-funding multiple accounts remains a core obstacle to streamlining the international payment system. Using traditional payment flows, funds need to be proactively placed in the right accounts in the right country to meet traditional cross-border payments requirements. This need to pre-fund accounts is called the Liquidity Problem and is one of the root causes of hold-ups with cross-border payments. To solve this, Ripple has developed a cross-border transaction solution called On-Demand Liquidity (ODL), which uses the digital asset XRP to enable funds to be sent to destination accounts immediately — literally on-demand, rather than days later — while simultaneously freeing up working capital.
Because of its design, the digital asset XRP is especially useful in making cross-border payments faster, more efficient and reliable, and less costly. XRP acts as a blockchain-powered cross-border bridge between two different currencies, ensuring that payments are delivered in a given geography’s or user’s local currency in as little as three seconds.
Put simply, it’s now possible to send and receive money to or from any location, in any currency, across the globe in less than a minute. Talk about transformation.
The Time to Revolutionize Cross-Border Payments Is Now
Today’s distributed, global, interconnected economy has the cross-border payments industry at a key inflection point.
For millions of remitters, small businesses, and emerging digital marketplaces, speed and cost matter. Time delays in payments can drastically interfere with people’s livelihoods and can negatively affect their financial stability. Everything from covering critical medical expenses in emergencies to tuition payments can be derailed by an outdated, overly complex cross-border payments system.
Banks, payment service providers, and financial institutions that can bring cross-border payment and digital currency methods into the modern world and provide a truly frictionless experience that reduces the many pain points consumers are facing today will emerge as leaders in tomorrow’s global payment industry.