Ripple Will Benefit As the Need for Digital Payments Grows
- Ripple (XRP) has advised that it will put its main focus on the need for remittances and payments for SMEs and therefore anticipates that On-Demand Liquidity’s transaction volumes will rise.
- Ripple will open new avenues this year and expects to see unprecedented support for RippleNet.
Ripple advised that they will move their focus on the Demand Liquidity payment solution in the future. The announcement states that the upheaval caused by the Coronavirus pandemic has led to there being a “new normal”. As a result, the need to digitize money has been highlighted and there has been a rise in demand for electronic payments.
Ripple says that during the present situation some countries have seen an 80% rise in digitalization. Of that 80%, digital remittance payments have risen by 40%. Ripple believes that this shows, that there is a strong demand for worldwide digital payments that cannot be met by the restrictions of the current system: The fundamental infrastructure is siloed and complex, which leads to significant delays and high transaction fees.
This is the reason the On-Demand Liquidity payment solution is introduced as another option. As indicated by the report, ODL uses the XRP digital coin which is less expensive, quicker, removes the need of a middleman, and it is more cost-effective than pre-financed accounts: ODL’s ability for eliminating pre-funding is particularly important during times of uncertainty due to the exposure to risk and increased volatility.
In addition, the report refers to a particular case in which ODL was crucial. According to Ripple, during the pandemic, the price of the Mexican peso dropped by 20% against the USD. Ripple’s customers who used ODL were increasingly more protected from this issue because of its speed in making cross-border payments.
Ripple Puts New Focus on SMEs
For these reasons, the payment solutions company has chosen to keep supporting individual low-cost, high-frequency transactions. Ripple said: “We are reducing the emphasis on large treasury payments-which are traditionally used to fund businesses and services in the absence of real-time transfers-to support individual, low-value transactions, addressing the growing need in remittances and SME payments. This may reduce overall ODL transaction volumes.”
Despite this, the company anticipates to see large growth in ODL adoption and increased business support for RippleNet. Ripple reported that it will open new payment solutions in 2020, but did not clarify the details.
In the crypto world, the announcement was met with criticism. Some clients claimed that the treasury payments Ripple alludes to are made to MoneyGram. As announced by CNF, the possible acquisition of MoneyGram by Western Union could be in negotiation. This could prompt reduced payments and reduced transaction volumes. A community expert said: “ODL volume goes down after rumor of acquisition of MoneyGram by western union. Or Maybe Ripple does not want to pay more incentives to MGI (MoneyGram investors). We will see how this plays out.”
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