According to the research by investment bank Credit Suisse, the international money transfer service provider, Western Union is currently testing and considering the usage of Ripple (XRP). The report from late January 2020 reads,
“Western Union: Testing and considering use of Ripple (XRP) for cross-border (Ripple has made a $50mm investment in Western Union competitor, MoneyGram).”
Although mentioned XRP, it is possible, the firm doesn’t explicitly mean using the digital asset rather using it as a ticker for Ripple. Out of its list of more than 300 customers, Ripple has only a handful of them actually using XRP.
Also, it was recently revealed that the San Francisco-based company is paying compensation to its partners to utilize its digital currency.
MoneyGram is one such partner with which Ripple is in a two-year agreement to use XRP via On-Demand Liquidity (ODL previously called xRapid). Besides the $50 million investment from Ripple, MGI hopes to improve its working capital, which is reducing the need for funds in foreign banks.
Another partner of Ripple, Transferwise, is also evaluating various technologies including Ripple but “have yet to find a solution that enables them to improve on their current speed, costs, etc.”
Now, Western Union is also evaluating Ripple, despite being initially less bullish on the company. In June last year, CEO Hikmet Ersek said the trials revealed Western Union is five times cheaper than Ripple but trials continue.
Unlikely to gain C2B payments adoption in medium term
The research states cross-border B2B is the “most meaningful” medium-term use for crypto payment platforms like Ripple that have the potential to reduce settlement times, from days to seconds, and provide savings with low bps, but large absolute dollars, states the financial service provider.
Cross-border B2B payments, it says, are an “actual pain point,” a problem that needs to be solved.
From the crypto space, various companies besides Ripple are working towards solving this issue. JP Morgan’s USD backed stablecoin, JPM Coin is one such solution for use in B2B payments, securities transactions, and treasury applications.
IBM is another one involved through its IBM World Wire cross-border solution that uses Ripple’s competitor Stellar protocol along with a multi-digital asset approach such as stable coins and central bank coins.
R3 offers Corda Settler which partnered with SWIFT on standards and Global Payments Innovation (Swift GPI). It also supports XRP but is intended to support multiple options.
However, the report says cryptocurrencies are “unlikely to gain C2B payments adoption at least for the medium term.”