Key Takeaways
- Ripple emphasized its dedication to launching Ripple USD (RLUSD) under the highest regulatory standards, with full NYDFS supervision.
- RLUSD offers near-zero transaction fees and upfront transparency on pricing, eliminating hidden fees typically encountered in traditional banking.
- RLUSD provides global payment access, ensuring inclusivity for large and small financial institutions.
- Moreover, using the XRP Ledger (XRPL) and Ethereum (ETH) chains enables near real-time settlements, independent of banking hours or holidays.
Cross-border payments company Ripple launched its stablecoin, Ripple USD (RLUSD), and started trading globally on Tuesday, December 17th, 2024.
RLUSD is a stablecoin backed by the US dollar and recently received approval from the New York Department of Financial Services (NYDFS).
Ripple has also formed an advisory board for RLUSD, including notable experts such as the former Reserve Bank of India governor.
In this article, let’s discuss how the company’s newly launched product could help address local banks’ six common cross-border payment challenges.
High Costs And Hidden Fees
Traditional banks frequently need help with processing fees, foreign exchange (FX) fluctuations, and capital being tied up. Additionally, hidden fees from third-party providers add to these complications.
RLUSD, powered by blockchain, offers end-to-end transactions with minimal or no transaction fees. Furthermore, users receive an upfront quote for their transactions before making payments, ensuring transparency and eliminating hidden fees.
Sluggish Transaction Settlements
Banks typically have a lengthy processing time between initiating and completing transfers, leaving customers dependent on the bank’s staff, bureaucracy, and technological limitations.
In contrast, RLUSD leverages the XRP Ledger (XRPL) and Ethereum (ETH) chains to ensure near-instant transaction processing from start to finish. Settlements are completed in seconds without being restricted by banking hours, weekends, or holidays.
Limited Access To Services
Larger financial institutions typically overshadow smaller banks in terms of reach. However, Ripple levels the playing field with its global payments network, ensuring that even small banks and startups can access inclusive financial services.
Technological Barriers
Varying levels of technological infrastructure often complicate cross-border payment processes, leading to longer reconciliation times between parties and the frequent need for third-party mediation.
The more parties involved in a transaction, the more complex the process becomes, impacting the transfer’s success, efficiency, and speed. Ripple Payments streamlines this by simplifying the initiation and completion of transactions, mainly through its Ripple Home browser plug-in extension.
Risk And Compliance Management
Small financial institutions often need to carefully assess the risks associated with correspondent banking, including credit, operational, compliance, and FX risks.
Ripple’s platform ensures that users work with compliant institutions and individuals globally. Additionally, at the start of each transaction, users are provided with an upfront payment quote and locked-in FX rates.
Liquidity Management
Small banks often face the challenge of managing multiple currencies and dealing with exchange rate volatility across different markets.
Ripple Payments provides a streamlined solution that connects local currencies with RLUSD and XRP. This efficient payment flow helps unlock significant liquidity for customers.
Final Thoughts
In conclusion, RLUSD represents a bold and promising step forward in the evolution of cross-border payments. If successful, Ripple’s newly launched product has the potential to reshape the cross-border payment space and democratize access to financial services on a global scale, enabling a more inclusive, efficient, and cost-effective financial system for businesses and individuals.
