Western Union CEO Says No Serious Gain from Ripple’s xRapid So Far
The global remittance giant Western Union said it hasn’t witnessed any profit-oriented boon from piloting Ripple’s xRapid platform, which uses Ripple’s scalable digital asset XRP, to make cross-border payments. Countering the assertion, Ripple pointed out that over the course of the pilot program Western Union leveraged xRapid only for few transactions — too low to gain an advantage.
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xRapid Not Currently Reducing Costs, Says Western Union CEO
Earlier this year, payments heavyweight Western Union shook hands with crypto payments play Ripple to pilot the XRP cryptocurrency in testing cross-border payments between foreign currencies in a cost-effective manner.
However, six months down the line, Western Union CEO Hikmet Ersek has revealed that until now the payment settlements using XRP have not proved to be financially fruitful.
Ersek told Fortune:
“We are always criticized that Western Union is not cost-efficient, blah blah blah, but we did not see that part of the efficiency yet during our tests. The practical matter is it’s still too expensive.”
As for now, the pilot program will continue but Ersek highlighted that Western Union’s existing payment system is established and effective and if xRapid, powered by XRP, proves unable to lower costs there is no point for the company to switch to blockchain technology.
Ersek did point out the trial run — only 10 transactions — was likely “too small” and therefore requires more time to expand before jumping to final conclusions. It’s no surprise that the company isn’t enthralled with the pilot so far, however, as they previously cast shade at bitcoin for its high transaction fees in 2017.
Ripple: Yeah, Way Too Small of a Sample Size
Meanwhile, reasoning against Ersek’s statement, Asheesh Birla — a senior vice president at Ripple — emphasized that Western Union xRapid trial had not exceeded 10 transactions. According to Birla, Western Union could cut half its remittance costs if it applied xRapid to all of its transactions:
“If they were to move volume at scale, then maybe you would see something, but with 10, it’s not surprising that they’re not seeing cost savings. They do millions of transactions a month, and I’m not surprised that with 10 transactions it didn’t have earth-shattering results.”
Going further, Birla said the reason Western Union does not see profit is that it is operating its traditional remittance system alongside the distributed ledger technology:
“Unless you’re going to take those fixed costs out of the ecosystem, it’s not going to be worth it for them to move on.”
Western Union is one of the few firms that have selected to test xRapid, whereas notable financial services company American Express chose to use xCurrent. Reportedly, American Express has seen favorable progress with the system. Moreover, the U.K.-based foreign exchange Currencies Direct Ltd. recently announced the completion of a successful cross-border payment using xRapid. Currencies Digital Ltd. stated that using the system was “game changer.” So some subjectivity certainly comes into play.
Still, there’s chop in the water, and the Ripple community certainly has a lot of swimming to do accordingly.
Earlier this year, Ripple's CEO said he knew of banks planning to use the XRP cryptocurrency. Today, Ripple execs are quoted in Reuters saying that banks aren't interested in using XRP or cryptocurrencies.
A misquote somewhere or did something change? https://t.co/7n2Eft2Ae0
— Nathaniel Popper (@nathanielpopper) June 13, 2018
The Ripple Security Question Grows
Earlier at today’s crypto-centric Yahoo Finance All Markets Summit, top Securities and Exchange Commission official William Hinman seemingly suggested Ripple’s XRP may be a security according to U.S. law.
The SEC comments this morning seem to have been worded to strongly suggest, without saying it outright, that Ripple's cryptocurrency, XRP should be categorized as a security. Do lawyers out there disagree? And why not just come out and answer this lingering question?
— Nathaniel Popper (@nathanielpopper) June 14, 2018
If true, the stakes have just been raised considerably for Ripple. We’ll have to watch and see how it all plays out from here.
Should Western Union switch to xCurrent or expand its xRapid pilot? Share your views in the comments section.
Images via Western Union, ABC