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Financial institutions who participated in a recent pilot of Ripple (XRP)’s xRapid platform have reported transaction savings of 40-70 percent, Business Wire reports Thursday, May 10. In addition to cost savings, the participants have noted an improvement in transaction speed – from the average 2-3 days to “just over two minutes.”
XRapid is a liquidity solution for Ripple’s blockchain-powered real-time gross settlement system, which is designed as a tool for facilitating cross-border fiat transfers between financial institutions. Ripple is currently the third largest cryptocurrency by market capitalization, according to data from Coinmarketcap.
According to the pilot results, participating institutions reported 40-70 percent in savings by not having to use foreign exchange providers, as well as due to faster payments.
Head of product Asheesh Birla told that the company looked at seven pilot projects, finding that the results were fairly similar across the board. As a result, the startup aggregated the data into the 40-70 percent savings released in its report on Thursday. He also noted that transactions across borders only took a few minutes, compared to a period of several days for traditional payments of that kind.
The platforms piloting xRapid recognized that speed, he said, adding “they were like, ‘Wow, this entire thing is happening in a matter of seconds all the way through,’ and that’s just not possible given the way the current legacy financial system works.”
While the transactions from one financial institution to another took a few minutes, the portion actually involving the XRP ledger only took a few seconds, Birla said. The bulk of the time spent was caused by the institutions converting fiat to XRP and back through local exchanges.
“It takes a few minutes to process and send out into local rails,” he said.
Now Ripple plans to focus on moving from pilot programs to full-scale launches, he said, though there is no firm timeline yet for those plans.
“We’re going to continue running pilots and we’re working on putting the final touches on the product. The next step now is moving those customers from pilot to production,” Birla explained, adding:
“With financial products and payments, there is no Silicon Valley ‘move fast and break things,’ we really have to make sure we’re buttoned up from security standpoint, from the compliance standpoint.”
The pilot tested payments between the U.S. and Mexico. BusinessWire notes that the current system requires banks to either tie up their capital in pre-funded bank accounts in Mexico, or to go via a costly correspondent banking network.
Payments with the use of Ripple took around two minutes, as opposed to the average 2-3 days that conventional cross-border payments take, according to a report by Finance Magnates.
Paul Dwyer, CEO of money-transmitting firm Viamericas, said that the pilot had shown that digital assets will play a key role in the future in helping banks to “safely address some of the structural inefficiencies of legacy settlement infrastructure,” emphasizing that the system facilitated “rigorous compliance controls.”
In April, Santander became the first bank globally to implement a customer-ready blockchain-powered international payments network, using Ripple’s settlement infrastructure technology. This week, JPMorgan filed its own in-house patent for a peer-to-peer payments network, which would use blockchain technology for intra- and inter-bank settlements.