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Ripple’s success in the Mexico-USA money transfer corridor forces it to consider expanding to other geographic areas

June 11, 2020

Given the dramatic changes in the global economy, digital payment services are playing an increasingly important role for people around the world. Today’s crisis rThere is a great need for digitizing cash, access, speed and reliability, especially for those who send money to their loved ones.

In this regard, Ripples senior vice president of product management and corporate development, Asheesh Birla, in his latest report in Ripple InsightsThat the San Francisco-based payment startup plans to open new XRP remittance brokers this year.

Digitization has increased rapidly worldwide: in Italy, for example, up to 80%. The global growth of digital payments is also accelerating. The increase in electronic transactions by more than 40% and the increase in digital transfers for various payment providers, including Western Union and MoneyGram International.

Ripple’s success in the Mexico-USA money transfer corridor forces it to consider expanding to other geographic areasRipple’s success in the Mexico-USA money transfer corridor forces it to consider expanding to other geographic areas

Warren Anderson, head of developer relations at Ripple, argues that the global payment company has processed more than 10% of the total cash flow in the US-Mexico corridor through its XRP transfer platform ODL.

Ripple is the third largest broker in the world

While speaking virtually at Reimagine 2020, Anderson found that Ripple had slowly started to publish data on the flow of transfers between the two countries It is the third largest runner in the world.

“As a result, the United States and Mexico are one of the largest remittance brokers in the world, and Ripple found that more than 10% of that electricity actually flowed through our production network.”

Ripple’s cash flow between the U.S. dollar and the Mexican peso is fueled by the Mexico-based Bitso crypto exchange in a partnership founded in late 2018. In March, the exchange announced that 2.5% of remittance transactions would be processed from the United States to Mexico. Bitso’s CFO Bárbara González Briseño attributed this success to the company’s partnership with the startup in San Francisco.

With that in mind, the XRP / MXN pair’s liquidity index in Bitso had a new historical high at the end of last month when it hit a record 37.3 million, demonstrating the utility of the platform for cross-border payments in the EU Mexico-US border

RippleNet ODL

The digitization of global payments may not come early enough. The underlying infrastructure is isolated and complex, which results in significant delays and high transaction fees. To speed up this process, financial institutions pre-finance accounts in target currencies. However, this is a costly effort that keeps assets together and exposes companies to currency risk.

In order to, Financial institutions need RippleNet’s on-demand liquidity service (ODL) to enable instant global payments and meet market demand.

Sending cash payments requires more working capital and resources than digital payments. Because the digital XRP asset can be shipped directly, instantly, and inexpensively without a central broker, XRP eliminates the additional costs associated with sending cash payments and can be used as an alternative to pre-financing.

As a link tool in ODL, the higher the liquidity of XRP, the lower the cost and risk of each transaction.

The advantages of ODL are so convincing that they enable the future of global payments. They expect companies to support even more transactions on RippleNet than ever before and that additional new connections will be established in the network.

According to the Ripple Executive, the company is on the right track to connect new countries with ODL by 2020

“Ripple is well on the way to opening new ODL brokers this year. We gain new customers and work with existing customers to increase ODL volume with major brokers such as USD-MXN, USD-PHP, AUD-USD and PHP and from EUR – AMERICAN DOLLAR “

It is unclear which countries or brokers Ripple wants to target in the short term. However, the payment company announced in February that it was working to add new brokers in Europe, the Middle East, Africa, the Asia-Pacific region, and Latin America.

As consumers and businesses adapt to the new standard, Birla warns that ODL volume could be different in a world struggling with the Covid 19 pandemic.

Ripple can reduce the stress of pre-financing its customers by enabling instant cross-border payments for consumers. They see the benefits of ODL as fundamental to their business to maintain and increase market share.

In addition to Mexico, Ripple is represented on the Latin American market in Peru.through the second largest bank in the Latin American nation.

In November 2019, Interbank Peru’s Joisie Montilla said at SWELL 2019 that the company was determined to implement Ripple’s on-demand liquidity (ODL) system for cross-border payments to increase acceptance.

Interbank is the second banking institution in Peru with more than 122 years of history and more than 2 million customers with assets of around $ 4 billion.

It would not be surprising if the company actively involved a broker in the region, particularly in South America. taking into account the fact that the favorable conditions for implementation are very similar to the Mexico-USA corridor.

With one of the most active and aggressive migrations in recent years Venezuela is a challenge for any company that is determined to support transferss in a decentralized, immediate and secure manner, as we have seen on other occasions.

With the recent Ripple executive talks in Brazil and one of the most active borders after the Colombian-Venezuelan, the Brazil-Venezuela corridor has a lot to contribute to future plans of this kind.

For the time being, we should expect solutions to be implemented in the region on behalf of the company, similar to what has already been done in Peru and Mexico.