By Karoliina Liimatainen on 29th May 2018
Partnering with Ripple, Currencies Direct cut the average transaction time to less than four seconds in international payments. Chief product officer Brian Harris believes the underlying technology of cryptocurrencies has a great potential for mainstream uses.
Foreign exchange provider Currencies Direct has successfully tested lightning-fast international money transfers using Ripple’s cryptocurrency XRP.
“The delivery was generally under four seconds, which was phenomenal when you think about how we might be able to scale and apply that across multiple markets,” said Brian Harris, the chief product officer of Currencies Direct in an interview.
Because of Ripple’s existing banking relationships, the pilot project was done between the United States and Mexico using the US dollars and Mexican pesos. The outgoing payment was converted first to XRP, and then into the currency of the destination country using digital asset exchanges. According to Harris, the pilot was a resounding success.
“Whenever you do these pilots you want to be very clear about what does success look like. We set out to measure two things: how quickly can we move the funds from one country to another and what is the cost of delivery.”
The cost was within the target range and the speed exceeded expectations – on average taking under four seconds.
“Typically transfers like these would take days or at least hours. We set up a concrete set of objectives for our partnership with Ripple. They absolutely delivered on that. We absolutely delivered on that. That’s an exciting outcome for a trial," said Harris.
Currencies Direct is among the first European providers to successfully complete international transfers utilising Ripple’s xRapid platform and its cryptocurrency XRP. Harris said that this is one logical way to utilise cryptocurrencies as a transfer of value, as originally intended, instead of just a speculative asset class.
Ripple has advertised that its xRapid service cuts transaction fees by 40–70 per cent. Asheesh Birla, a senior vice president at Ripple, said in a press release that “results speak for themselves.”
“XRapid leverages XRP to transform the way money moves by significantly lowering the cost and time it takes to make a cross-border payment."
Currencies Direct, established in 1996, is known as a traditional international payments provider that aims to offer better exchange rates than banks do. The London-based company operates under FCA’s regulatory oversight and serves both consumers and companies.
“Our consumer customers are largely people who are doing purchases like buying or selling a property in Spain. On the business side, we target small and medium-sized businesses that typically have invoice payables or invoice receivables around the world,” Harris said.
Regardless of its traditional roots, Currencies Direct is always on the lookout for new ideas to do transfers faster and cheaper. With the Ripple pilot project, Currencies Direct is venturing into the wild world of crypto.
“There are a number of fintech companies that interest us, and we’re keeping our finger on the pulse of what is happening. But it’s not really about the crypto or other technologies, it’s about improving things,” Harris said.
Harris first met Ripple’s management “five or six years ago in San Francisco”. Ever since then, he has followed how Ripple’s technology is maturing. With its own cryptocurrency XRP, Ripple is able to create liquidity and enable instant currency transfers within its network of bank partners and other financial organisations.
“If we want to get funds in the US, we choose what banks we are going use to deliver those funds. We have a set of relationship in all countries we operate in. With Ripple there’s still a banking relationship at the end, because ultimately most people want their funds to be converted into money in a bank account, but we can use a different, faster delivery path, “ Harris said.
The burning question is when Currencies Direct will start using Ripple in its everyday operations. Harris is excited about the promising technology but won’t give a set schedule for the rollout yet.
“At the end of the day, it was a very successful pilot. We need to now evaluate when it makes sense for us to do a full implementation. That is largely driven by a what combination of countries can utilise the Ripple network to deliver funds.”
Currencies Direct is not the only company testing Ripple’s technological capabilities. For example, Dallas-based Moneygram announced in January that it would also start using XRP in its payment flows. Ripple is constantly adding partners to its network and attempting to change the way international money transfers work. For Harris, this is one way for cryptocurrencies to break into the mainstream.
“We’re on the cusp of applying new technologies like cryptocurrencies and blockchain to everyday uses. There’s a lot of activity in testing these uses. I wouldn’t be surprised if in the coming year we’ll not only keep doing a variety of pilots with Ripple and other partners but also commercialise a number of technologies that improve the delivery of money,” Harris said.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.