- Swift Still Dominating cross-border payments space
- Newer technology solutions in comparison are currently used to “a very limited extent”
- But speed and transaction costs are the primary considerations when looking for a cross border payment system
The 2019 report by the Association for Financial Professionals (AFP) underwritten by JP Morgan revealed that more than 60% of survey respondents believe faster payments will have a positive impact on their organizations.
While 37% are looking to stay current with new developments and aim for early adoption to reap early benefits, 24% plan to be aware of new developments to be better prepared.
Ripple also shared a figure from the report that shares respondents' preferences to factors they consider when selecting methods for sending cross border payments.
— Ripple (@Ripple) October 31, 2019
Speed is the primary factor that majority, a whopping 73% of the financial professionals look for in a payment system. Transaction costs (64%) and certainty of payment follow.
These findings surely had the XRP community excited as Ripple promotes itself for those two factors specifically.
As per Ripple’s website, on-demand liquidity (ODL), formerly known as xRapid, that leverages the digital assets allows financial institutions to source liquidity in seconds by eliminating the need for pre-funded accounts in destination countries for international payments, especially in emerging markets.
Ripple’s ODL product reportedly takes 3 seconds to settle transactions, offers 40 to 60% cost savings and is available 24/7/365.
Swift Still Dominating Cross-Border Payments Space
However, legacy wires (Swift) still dominate the cross-border landscape because it has the greatest reach.
68% of organizations’ cross-border payments are done via Swift wire transfers. 80% of survey respondents report that some percentage of their organizations' B2B transactions made by cross-border payments are done via Swift.
Comparatively, newer technology solutions for cross border payments are currently used to “a very limited extent.” This applies to solutions like Swift GPI.
However, the report says further awareness about “cross-border solutions built on technologies such as blockchain, digital currencies, and APIs, may be advantageous.”
Corporate practitioners are well aware of the benefits of electronic payments but there are still challenges, such as shortage of IT resources, lack of integration between payment and cost of making changes to internal processes, to overcome in using these methods.
Last year's AFP technology Survey found that the implementation of emerging technologies is low as the majority of companies don't have any plans either. Still, the adoption of technologies can have a “significant impact.”
Open banking and application programming interfaces (APIs) are emerging technologies, according to financial professionals that most likely to have an impact on the payments industry more than any other technologies.