Ripple’s cryptocurrency product goes into full commercial use

October 04, 2018 14:51
Blockchain company Ripple Labs has launched its cryptocurrency product called xRapid for international payments. Photo: Reuters

Ripple Labs, one of the most prominent startups developing the blockchain technology, said three financial institutions have signed up to use its cryptocurrency product for cross-border payments.

Money transfer companies MercuryFX and Cualix, and financial firm Catalyst Corporate Federal Credit Union have agreed to use the product called xRapid, which will deploy the cryptocurrency XRP for fast international transactions, Ripple said.

San-Francisco-based Ripple has been testing xRapid with several payment services providers including Cuallix and Mercury FX, as well as money transfer giants Western Union and MoneyGram. The latest development marks the first time XRP goes into full commercial use by financial services firm.

Ripple explains how xRapid works in cross-border payment transactions: Fiat money is sent into the xRapid system, which converts it into XRP to move it through Ripple’s product faster, and the money is then converted to the receiving party's desired fiat currency.

If one uses the SWIFT international payments network, sending US$1,000 from the United States to, say, Mexico would take two to three days to settle and cost about US$40 to US$75 on average, Mercury FX chief executive Alistair Constance told Fortune Magazine.

With xRapid, Mercury FX was able to make payments “in two minutes at a cost of not even a couple of cents”, Constance said.

Blockchain refers to the decentralized ledger that logs transactions and other information, which is maintained by a network of computers rather than a centralized authority and secured by advanced cryptography.

Founded in 2012, Ripple Labs’ business model relies on deals with financial institutions, which serves as a major source of revenue, according to a CNBC report. The firm currently has over 120 clients with business partners in more than 40 markets.

Ripple Labs has another technology solution called xCurrent. It was used to build Banco Santander SA’s international money transfer service for retail customers in Britain. Called One Pay FX, the service was launched in April.

The xCurrent product enables banks to track information about payments in real time and without a counterparty, thus speeding up the settlement process. It does not use XRP in the process.

On the other hand, xRapid is primarily targeted at banks’ payment transactions in emerging markets, and is not being used by banks.

“Banks worldwide are not first adopters of the xRapid product, but we are seeing a lot of financial institutions in general and payment providers moving forward with that product,”  Asheesh Birla, Ripple Labs’ senior vice president of product, told CNBC.

However, Ripple’s CEO Brad Garlinghouse told CNBC that by the end of 2019, “dozens of banks” will use Ripple’s XRP-based blockchain product.

There has been some confusion about the relationship between Ripple Labs and the cryptocurrency XRP. The company has disclosed that it owns 60 billion XRP tokens, or 60 percent of the total 100 billion tokens in existence. As such, some see a potential conflict of the interest.

However, Ripple insists that there is a distinction between the company and XRP, which is an independent digital asset of the open source blockchain network XRP Ledger.

Ripple, as a private technology company, uses XRP and the XRP Ledger in its product, xRapid, which it offers to financial institution clients. However, it does not control the digital asset or the technology, the company said.

As the third-largest cryptocurrency by market cap after Bitcoin and Ether, XRP is trading at US$0.53 at 11:00 am on Oct. 4, Hong Kong time, with a market cap of US$21.4 billion, according to

It notched a record high above US$3 at the beginning of the year.

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A representation of the Ripple virtual currency. Photo: Reuters