In our last discussion, we showed how the fragmented landscape of cross-border payments is being redefined by the power of ISO standardization and RippleNet’s fresh approach to technology.
Cross-border payments are about to change today. Blockchain technology and digital assets like XRP can create a smoother cross-border payment experience.
At Ripple, our mission is to remove frictional drag on global payments and enable money to move the same way it does today – digitally and instantly. We work with banks and payment providers to modernize legacy systems using blockchain and digital assets, and to make transferring money around the world easier, faster and more reliable.
Our philosophy is to provide every bank and payment provider with a real-time connection to a global network called RippleNet, which strictly adheres to the ISO2022 standard and enables these organizations to instantly send and receive payments among themselves on behalf of their customers Finality and transparency – regardless of how much money is sent or which currencies need to be sent to and from.
However, the ability to instantly send a payment across borders doesn’t solve the entire problem. This is because funds need to be put in the right accounts in the right country at the right time for payments to actually flow. This need to pre-fund accounts is known as the liquidity problem and is one of the causes of delays in cross-border payments. To solve this problem, Ripple created a solution called On-Demand Liquidity (ODL), which uses the digital asset XRP to enable instant funds to be transferred to target accounts – literally on demand, not days before.
In this way, the digital asset XRP is particularly useful in making cross-border payments faster, more efficient and cheaper. XRP acts as a bridge between two different currencies, ensuring that payments are instantly delivered and received in the local currency of a specific region or user.
RippleNet is a decentralized global payment network that can send and process global payments on demand. It uses rules and standards that have been approved by its members and aligned with the ISO 20022 standards. This allows RippleNet to cut the processing time for cross-border payments from three days to just three seconds, which makes this process really smooth.
The growing market interest in crypto and cross-border payments
So far, the digital asset market has been fairly monopolized by wealthy individuals and crypto enthusiasts. However, there are a growing number of indicators that suggest that institutional players are entering this market. Recently, the crypto markets have seen an all-time high in open positions in futures contracts with companies such as the Chicago Mercantile Exchange.
A report by Fidelity Digital Assets surveyed 800 institutional investors and found that almost 80% found compelling characteristics of digital assets such as high upside potential and a lack of correlation with other asset classes. Even longtime crypto dissidents like macro investor Paul Tudor Jones recently jumped into the digital asset market due to the pandemic. He believes quantitative easing will lead to inflation and considers bitcoin to be one of the best inflation hedges.
What was more interesting, however, was that 60% of respondents believe that digital assets have a place in their investment portfolio. This is a significant number considering the pre-pandemic survey was conducted. The role of digital assets in a post-COVID world is becoming increasingly important and draws a parallel to gold.
While digital assets were generally viewed as a riskier investment, gold is no more used industrially than it is for cryptocurrency. It’s about the value people place in them. The fact that digital assets can provide specific services like cross-border payments means that more investors are now realizing their value and creating some level of market confidence in those assets.
Now is the time to revolutionize cross-border payments
The cross-border payments industry is currently at a turning point.
For millions of referrers, small businesses, and emerging digital marketplaces, speed and cost are important. Time delays in payments can drastically affect people’s livelihoods. Everything from covering critical emergency medical expenses to tuition fees can be derailed by an outdated, overly complex cross-border payment system.
Banks and financial institutions that can bring cross-border payment methods to the modern world and offer a truly seamless experience that alleviates the many problems consumers face today will emerge as leaders in tomorrow’s global payments industry.
If you’re looking to reinvent cross-border payments for a better future, learn how to leverage RippleNet’s global reach and on-demand liquidity service, and join our network today.