It had been talked about for months, but Ripple’s xRapid is finally here. As per their blogpost, 2018 was an explosive year for Ripple. Not only has their network expanded its reach and size drastically, but they’ve also had massive customer growth this quarter and last. And it seems no more fitting way to end the year than with the release of their most important product: xRapid.
Ripple has said that they were signing an “average of two production customers per week.” Today, they offer transparent, cross-border payments to over 40 countries. And it is with this strong year that xRapid was finally released.
Ripple has said that they will be providing seemingly instant, on-demand liquidity for cross-border payments with the help of their digital asset XRP. This comes with the use of xRapid, which is their product that will power these transactions. Made commercially available just today, multiple customers are moving this product into production in conjunction with their own services. These include Mercury FX, Cuallix, and Catalyst Corporate Federal Credit Union. All of these companies are directly involved in cross-border payments and currency transfers.
The news was announced at the company’s annual Swell conference, a two-day event attended by industry leaders, along with a reveal of the three institutional customers aforementioned.
What Does xRapid Do?
xRapid represents the first time XRP will be used in commercial application by financial services firm.
It eliminates the need for a pre-funded nostro account which executing cross-border payments. Instead, liquidity is provided through XRP. Costs are drastically lowered by this method since it does not need to pass through third-party money-transfer services as in traditional methods, which oftentimes results in high foreign exchange fees and their processing fees.
Mercury FX and Cuallix were both early participants in Ripple’s pilot program for xRapid. They found that the cost savings were significant enough to make themselves some of the first to use the product for their cross-border payment channels. For example, Mercury FX will be utilizing xRapid for currency transfers between Mexico and Europe. Cuallix, on the other hand, will be more focusing on transfers between the United States and Mexico. According to Cuallix, xRapid was needed because the previous systems for transfers were so slow, as if “operating from the 1960s.”
The current system is fundamentally slow and Ripple hopes to tackle that problem head-on. Frankly, if you want to move money from Mexico, for example, to the United States, it still functions on old systems build decades ago. The transfer of money, in this internet age, is the one aspect of our old ways of doing things that hasn’t really change. But this will soon not be the case.
The release of xRapid represents a monumental milestone reached for the company formed in 2012. The Ripple founders created XRP, the digital asset, around 2012 despite going by a different name at the time.
Currently, Ripple still holds the majority of XRP tokens, but they are kept locked away form liquidity purposes. The amounts that are available for market selling, however, are being used to raise funds for the company. For example, Ripple has been selling XRP continuously through their subsidiary XRP II — in Q2 of this year, for example, the company sold some $74 million worth of XRP.
Because XRP will be used for liquidity purposes, Ripple also announced three exchange partnerships that would facilitate their conversion to fiat: Bittrex, for U.S. dollars; Bitso, for Mexican pesos; and Coins.ph, for Philippine pesos. Other market-makers, who are not directly affiliated with Ripple, will also be involved.
What this all means is that Ripple is positioning itself as the de facto currency to be used for liquidity of cross-border payments. The ramifications of xRapid and future Ripple products is that soon, the instantaneous expectations we have with online information will soon come to finance. No longer will the old systems, which involve constant wait-times and slow response rates, have to be depended on to do a simple currency transfer. Instead, xRapid and other products like it will hasten the movement of money and make it instant.
With xRapid’s now-commercial release, we can expect more firms to jump on board in the not-so-distant future. Although currently it is not in use commercially by any banks, Ripple has said that these discussions are still “ongoing.”