Currencies Direct, a European FX broker and payment service provider, has announced that it has completed a successful pilot of Ripple Labs' xRapid product and is calling the XRP cryptocurrency "a game changer."
One of the biggest misconceptions about Ripple Labs, its products, and its coin XRP is that the only product that directly uses XRP is xRapid and not xCurrent, which, for example, Santander Bank is using for its cross-border payments system.
Currently, it seems that there are not any financial institutions that use xRapid in a production system, but on 10 May 2018, we started hearing about successful pilots of xRapid. This is what Ripple Labs told us back then about the results of these first pilots:
"For payments in the critical remittance corridor between the U.S. and Mexico, financial institutions using xRapid saw a savings of 40-70 percent compared to what they normally pay foreign exchange brokers. An average xRapid payment took just over two minutes, compared to today’s average of two to three days when sending cross-border payments. The portion of the transfer that relies on the XRP Ledger takes two to three seconds, with the additional processing time attributed to movement across the intermediary digital asset exchanges and local payment rails."
This, however, is first time we have heard from a European payment provider about xRapid. Currencies Direct, which in 1996 became the first money transfer provider in Europe, handled around GBP 4.5 billion in foreign currency last year; so, it is quite a major player.
According to Finextra, the trial Currencies Direct conducted involved a number of cross-border transfers between selected organizations, each of which was carried out via xRapid in seconds, compared to the 3-5 days that such payments can often take.
Here is how Ripple Labs describes how xRapid works:
"A payment journey with xRapid looks like this: a financial institution connects directly to digital asset exchanges in both the originating and destination corridors. The originating currency is exchanged into XRP which provides the necessary liquidity to power the final payment, and then in seconds that XRP is exchanged into the destination currency in the second digital asset exchange. Once this transaction takes place, the funds are sent out on the local rails of the destination country for payout. The transaction is tracked end-to-end, and the result is a cross-border payment that is cheaper and faster than ever before."
We can summarize the benefits of using XRP as follows. For banks, the main benefit is lower liquidity costs since it allows them "to source liquidity on demand in real time without having to pre-fund nostro accounts." For payment providers, such as Currencies Direct, the benefits are that using XRP allows them "to expand reach into new markets, lower foreign exchange costs and provide faster payment settlement."
The Chief Product Officer of Currencies Direct, Brian Harris, who is delighted with the results of the trial, made the following comments about XRP:
"Our trial with XRP was a resounding success. We’re currently assessing our next steps, but the evidence we’ve gathered indicates that the use of XRP is a game changer, making payments near-immediate and significantly improving service to our customers... Our goal is to offer the best possible service. We believe that utilising cryptocurrencies in this way - as a transfer of value, rather than as a store of value - is the next logical step for our industry. It is, after all, the intended purpose of cryptocurrencies and we’re proud to be leveraging new technology to deliver the most convenient and seamless experience for our customers.”
Harris continued: "This represents a revolutionary step for the industry and clearly shows how FinTech companies like Currencies Direct are helping to revolutionise the financial services sector...We’re proud to be early adopters of this technology.”
Asheesh Birla, Senior Vice President of Product at Ripple Labs, was equally happy:
"The results speak for themselves - xRapid leverages XRP to transform the way money moves by significantly lowering the cost and time it takes to make a cross-border payment. xRapid offers an enhanced payments experience, while also allowing payment providers to gain a competitive advantage in the market."
As more and more financial institutions around the world complete successful xRapid pilots, it should not be long before we see a large increase in demand for XRP, the currency, as these institutions move forward and take the next step of using xRapid for the majority (if not all) of their cross-border payments, which can only be good news for XRP.