Ripple has been recognized by the U.S. Faster Payments Council (FPC) as a major player in the competition for currency conversion in the digital asset industry, alongside Visa and Mastercard.
The FPC’s recent insights from its Work Groups focused on enhancing the speed of real-time payments, particularly by reducing settlement times from 2-3 days to instant. One of the challenges identified in achieving this goal is currency conversion for cross-border payments and digital assets.
Currency exchange typically involves third-party services and is a crucial aspect of the payment process for cross-border transactions. It requires coordination between correspondent banks, central banks’ settlement processes, and the parties involved in the payment. The FPC report also highlighted the complications caused by manual operations and compliance requirements in achieving immediate fund availability.
In the case of digital assets, the challenge goes beyond currency conversion and includes the conversion rates between different cryptocurrencies. The FPC recognized that distributed ledger technology (DLT) could potentially improve transaction speed and emphasized the importance of systems that support multi-currency settlements and real-time conversion rates for both cross-border and digital asset transactions.
The council acknowledged that while cross-border payments and digital asset transactions have similar business functions, the mechanics of currency conversion may differ. Key technological components to address these challenges include APIs for real-time exchange rates and payment tracking, AI and machine learning for data analysis and risk management, as well as digital wallets and DLT for transaction management and liquidity.
The FPC suggested that a trusted infrastructure is necessary for digital asset currency conversion, similar to traditional sources like Bloomberg and Reuters that provide FX rates for cross-border currency conversions. This infrastructure could potentially be built on DLT. In this context, Ripple was recognized by the Faster Payments Council as a company that could contribute significantly to providing the required technology and platform for digital asset conversions. The council also stated that Ripple will compete with Visa and Mastercard for dominance in this market.
Ripple’s involvement in this competition is likely due to its existing blockchain-based payment solutions that facilitate fast and cost-effective cross-border transactions.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. The author’s opinions expressed in this article do not reflect those of The Crypto Basic. Readers should conduct thorough research before making any investment decisions, and The Crypto Basic is not responsible for any financial losses incurred.