David Schwartz, Ripple’s chief technology officer, at the WeAreDevelopers conference in Berlin, Germany outlined XRP’s potential in reducing the friction in global payments. The CTO also hinted that Seagate, Amazon, Airbnb, Uber, and other companies that handle a large number of financial transactions on a daily basis can benefit greatly from the use of blockchain-based digital assets such as XRP.
Traditional Methods of International Payments Seems Unreliable
According to Schwartz, the present methods of international payments are unreliable since 6% of transactions fail. Even when payments are successfully processed, a sender may still inquire about its delivery from their bank. The bank, in this case, being uncertain may ask the sender to wait for three to five days before receiving a confirmation.
Similarly, companies like Seagate, Uber, Airbnb, Amazon, etc. make a large number of small payments on a daily basis. Amazon, for instance, needs to pay thousands of its merchants across the world. Uber will also love to pay a driver in the Philippines who need money to buy milk on the same day but has no funds.
Limitation of the Current Systems for Handling International Payments
The only problem is that there are no efficient payment systems that are reliable as the email in order to make either of these companies aim for faster and cheaper payments possible.
In the same vein, Uber, Amazon, and other reputable companies have hundreds of people working in their payment unit. However, there is no payments company that can confidently tell them to fire all these workers with a promise to handle all their payments much better.
The CTO believes XRP is a better option since it uses consensus to ensure that payments move more quickly and at a very low cost. It is even faster, cheaper, and more censorship resistant than Bitcoin because it does not use proof-of-work to confirm payments on its blockchain. In addition, XRP is a decentralized digital asset and as such has no connection with any jurisdiction. “The digital asset offers fast transaction time, low fees, and high transaction volume with low latency,” he adds.
No Revolution in Payments
Schwartz also outlined that the elements of commerce are the physical delivery of goods, the exchange of information, and payment for these goods. Nonetheless, there has been no revolution in payments. Things are, however, changing which will yield a more standardized system that will bring about a more flexible and powerful way of interacting with payments.
Ripple, therefore, intends to reduce the friction in global payments since they are worse compared to domestic payments. The latter is as a result of the standardized nature of domestic payments whereas international payments are not. This is because independent payment systems are disconnected which creates problems in the speed and cost of international payments.