Ripple and its XRP token have long been heralded by their legion of fans as a solution to slow and expensive cross-border payments. Many of such followers won’t let anyone forget that Banco Santander is known to utilize the technology for its OnePay FX platform.
Equally, international payments processors are known to be looking for ways to speed up cross-border transactions and reduce costs. The two seem like a match made in Heaven, and indeed in time they may be, but blockchain technology does not yet rival what is currently available, according to TransferWise co-founder and chairman Taavet Hinrikus.
Adoption Problems
Hinrikus was speaking during a debate on blockchain for Fortune magazine, where he poured cold water on the idea that blockchain was the inevitable solution to the remittance problem:
We’ve heard this dream many times from different people. However, if you start digging into it, you realize that it may look great on paper, but in reality, to make use of it, it’s really hard. We’ve looked at different blockchain technologies, but we haven’t found anything yet which enables us to do what we do in a way that is cheaper or faster.
Hinrikus stated that as blockchain platforms were struggling to find adoption, traditional fintech was constantly working on ways to reduce money transfer times and costs. Hinrikus revealed that TransferWise’s own technology can send a payment from Australia to one of the dozens of UK banks in fifteen seconds at a 1% cost, compared with highly restrictive blockchain alternatives at present. Hinrikus said that he has not yet seen “a better proposition” than the methods TransferWise currently uses, including Ripple.
Never Say Never
Ripple fans needn’t despair however, as Hinrikus didn’t shut the door on the idea of blockchain altogether. If every bank was using Ripple payment systems, he said, it would be a different story, and that “…if any of these gets enough adoption, and it actually materially helps us do things cheaper and faster, we’d love to (go through the Ripple network).”
With the rewards for being the primary blockchain remittance processor being potentially astronomical, competition to emerge as ‘the standard’ will continue to be fierce for some time.
