Ripple’s core selling point is cheap and near-instant cross-border remittances with its suite of products. Over 300 customers have now signed up for RippleNet while more than a dozen other financial institutions use the On-Demand Liquidity (ODL) product.
Ripple’s efforts to replace the existing archaic cross-border payments infrastructure with a more efficient system that utilizes its XRP cryptocurrency have been commended by various players in the industry.
The latest recognition comes from the United States Consumer Financial Protection Bureau (CFPB). In a document titled “Remittance Transfers under the Electronic Fund Transfer Act (Regulation E)” published on May 11, CFPB noted that it is amending Regulation E (Remittance Rule) and its interpretations so as to address some of the challenges faced in the remittance market.
The Bureau affirmed that it has been closely monitoring the international remittances sector and has taken notice of Ripple’s impressive growth and increasing banking relationships, adding that Ripple offers both a “payments messaging platform to support cross-border money transfers as well as a virtual currency, XRP, which can be used to effect the settlement of those transfers.”
Further, the agency quipped that Ripple’s cross-border payments solutions could allow banks and other financial institutions to know the exact amount (instead of estimates) that the recipients of the international transfers will receive even before they are sent out.
The document also mentioned the Society for Worldwide Interbank Financial Telecommunication (SWIFT)’s global payment innovation (gpi) tracking product, which continues to support cross-border payments.
How Banks Benefit From Ripple’s XRP-Based Solutions
By utilizing XRP, banks and payment providers eliminate the need for a third-party while making cross-border remittances. Without a middleman, the costs for these payments are reduced significantly. The average transaction fee stands at 0.0005 XRP as of May 17, which is basically negligible.
Additionally, XRP transactions typically settle in roughly four seconds, indicating that the recipients can receive the payments almost instantly. Moreover, the XRP ledger consistently processes at least 1,500 transactions per second and can scale up to 50,000 TPS to handle Visa’s throughput.
Ripple continues to score partnerships with financial institutions in a frantic bid to reach the mainstream. But will the firm be able to completely dismantle the legacy system to become the one true cross-border payments provider? That much the future holds. The recognition by CFPB, however, shows that it is indeed on the right track.