Ripple’s xRapid solution is about to take over as the preferred means of settling cross-border transactions. Ahead of its imminent launch, a number of companies led by Moneygram, and Western Union, have already given it a thumbs up.
xRapid for Cross-Border Payments
xRapid seeks to offer payment providers low-cost liquidity by utilizing XRP as the bridge currency. The tool utilizes the digital XRP asset to provide cash on demand for international money transfers. Built for enterprise use, the protocol should soon provide financial institutions with a reliable and highly liquid solution for cross-border payments.
RippleNet users will soon be able to use XRP for on-demand liquidity in a bid to facilitate payments in local currency. Tests have already shown that financial institutions can save between 40-70% on average on payments. Ability to complete transactions in less than two days is a competitive edge that sets xRapid apart from traditional methods.
Ripple CEO, Brad Garlinghouse, expects the first financial institution to use the new solution before the end of the year. To achieve greater success, the company will have to broaden its ecosystem to include more crypto-exchange partners.
Enhancing xRapid Liquidity
Partnering with as many cryptocurrency exchanges as possible is Ripple’s main goal now. Such expansion should result in new adoption vectors as well as more financial institutions using the platform. Additional exchanges will also go a long way in bolstering liquidity given the increased number of Market Makers.
“Today, we’re pleased to announce Bittrex will act as the preferred digital asset exchange for xRapid transactions that move through US Dollars. In addition, Bitso and Coins.ph will be preferred for the Mexican Pesos and Philippine Pesos, respectively,” Ripple in a statement.
At first, XRapid will struggle with liquidity given the amount of XRP traded in exchanges. However, that should change as time progresses with more crypto-exchanges coming on board. Increased liquidity should result in increased usage of XRP. The cryptocurrency price should thus receive a boost as xRapid gains traction with exchanges and financial institutions.
However, xRapid’s impact on XRP price will not be as big as most people expect. Slippage of order book that comes into being on buying large amounts of XRP should avert huge price swings. XRapid will only enable cross-border payments when liquidity is sufficient. Slippage will also need to exceed a certain amount to guarantee low transaction fees on cross-border payments.
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