Recently, Ripple has gained another banking partner. And this time, its a huge & impressive name – UAE Exchange. As you probably know, UAE is one of the countries that accepts fintech. They recently declared that Cryptocurrencies will be viewed legally as securities. Now, they want to implement RippleNet to launch cross-border remittances to Asia. This will probably be done in Q1 2019, as UAE Exchange’s CEO stated in an interview for Reuters:
We expect to go live with Ripple by Q1, 2019 with one or two Asian banks. This is for remittances to start with, from across the globe into Asia.”
There were no banks mentioned, but those banks would probably be located in India – the largest receiver of Remittances internationally. The UAE Exchange CEO, Bavaguthu Raghuram Shetty, have connections with India. Another factor that made us think it would be India is the amount of Indian migrants that are working in UAE.
The majority of the funds are now sent via foreign exchange branches. But now, different apps appeared to ease the money transactions internationally. UAE Exchange and Ripple hopes to capture this market and reduce the costs by using blockchain based services .
This is more than necessary for Asian countries. According to World Bank Prices Worldwide Database (WBPWD), the cost of sending a remittance to a tier three or tier two country can be as high as 7.1%. Ripple can significantly reduce the cost, increase the speed and offer a state of the art security of the funds.
Right now the most remittances happen through Western Union, Ria Money Transfer, MoneyGram and UAE Exchange. The other part of the market is fragmented into smaller players that are trying to survive with the increasing regulatory cost and compliance requirements. Moreover, even World Bank sees blockchain as a solution to the current problems:
“In the near to medium term, the technology [of blockchain] may be applied to reduce infrastructure costs… for cross-border payments and regulatory compliance… Smart contracts in the blockchain can help create a streamlined payment system by eliminating physical documentation and automating contract execution. This has the potential to significantly reduce remittance costs.”
Even though the cryptocurrency that is moving the most remittances right now is the Bitcoin, due to being the oldest and the one with the highest liquidity in the market, Ripple is coming strong from behind. The company would probably not be able to move as many dollars as Bitcoin is moving now, but its service could ease the banks transfers and automate those.
UAE Exchange working together with Ripple is another step forward into changing the ugly parts from the financial system. Ripple could reduce the 7.1% fee to a 0.1- 1% fee which will offer a lot of benefits to the workers as well as to the economy.
With Ripple being one of the best options for cross-border payments, partnerships like this could lead to more and more financial institutions into working with Ripple – until RippleNet would be the most use blockchain in the financial sector.
Image Source: Steemit
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