Ripple, the San Francisco-based provider of blockchain solutions for payments, has signed three crypto exchanges to establish the ecosystem of its flagship product xRapid, which allows firms to source on-demand liquidity product aimed mainly at institutions that have business in emerging markets.
Ripple is developing several blockchain-based solutions that enable cross-border money transactions between banks in a faster and cheaper way than the current systems allow.
According to the company statement, Bittrex will act as the preferred exchange for xRapid transactions in US Dollars. In addition, xRapid will tap Bitso and Coins.ph to facilitate transactions in Mexican Pesos and Philippine Pesos, respectively.
Money would be sent into the xRapid system, converted into XRP to move it through Ripple’s product faster, then be converted back into whatever currency is required at the other end.
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“1. A financial institution, that has an account with Bittrex, initiates a payment in U.S. dollars via xRapid which is instantly converted into XRP on Bittrex. 2. The payment amount in XRP is settled over the XRP Ledger. 3. Bitso – through its Mexican Peso liquidity pool – instantly converts the XRP into fiat, which is then settled into a destination bank account,” Ripple further explains the process.
Although Ripple is regularly grouped with other cryptocurrencies, its purpose is different as it also operates a decentralized payment settlement solution for banks and financial institutions that is fast and scalable.
Payments into emerging markets often require pre-funded local currency accounts around the world, meaning liquidity costs are high, Ripple explains on its website. Because xRapid has a much shorter transaction time, there have been major companies testing the product such as Western Union and Moneygram, but none have committed to it fully.
Earlier in May, Ripple revealed some results from the first pilot for xRapid. The company said financial institutions using the service paid between 40 and 70 percent less than they usually pay traditional foreign exchange providers for the same service. Also, transactions with xRapid took minutes, while the average cross-border transfer using traditional means takes 2-3 days.