Since the declaration of a collaboration between Western Union, the global money transfer service, and Ripple, there has been excitement in the crypto as well as forex industry as this could be a real-life use case. But Western Union’s chief executive Hikmet Ersek said this week that testing Ripple’s cryptocurrency XRP for payments hasn’t given the company any financial benefits as of yet.
Ripple too expensive according to Western Union
While addressing the audience during a presentation at the Economic Club of New York hosted by Fortune, Mr. Hikmet Ersek said while the company is testing Ripple’s xRapid product which uses its XRP digital tokens to transfer money between foreign currencies, it isn’t saving it money. He also mentioned that even though Ripple has said its blockchain technology coupled with XRP is a quicker and cheaper way for Western Union and others to transfer money around the globe.
Quoting him during the presentation, he mentioned
“We have 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.”
He said the company considers using XRP for payments only if it could help the company in reducing costs of Western Union. The CEO did make a note that the pilot Western Union is involved is could be “too small,” to consider this as a final conclusion since it only tested on transfers between the U.S. dollar and the Mexican peso.
Ersek said he wasn’t giving up on blockchain technology and that it could reduce costs down the road. He did make it clear and said he was committed to the pilot with Ripple.
The tone of the comments seems that Mr. Ersek is a strong advocate of traditional currencies. He doesn’t believe that people will give up their FIAT currencies and switch to cryptocurrencies if the offer presented itself because really, FIAT currencies are too rooted within national identity as a social norm.
Asheesh Birla, a senior vice president of product at Ripple, told Fortune that Western Union has sent only 10 payments using xRapid — which is too small to see any big benefits.
He mentioned that If Western Union were to move volume at scale, then maybe they would see something, but with 10 transactions, it’s not surprising that Western Union is not seeing cost savings According to him, if Western Union were to use Ripple’s xRapids more expansively, it could lower the costs by at least 50 percent for each transaction.
Is Ripple actually expensive to transfer money or is it the resistance of Western Union in using Cryptocurrecy and give up FIAT? Do let us know your views
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Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.