In its latest blog from the insight section, Ripple talks about the need of just-in-time payments for EU. The small and medium enterprises (SMEs) in this region lacks the trust and creditworthiness that requires them to pay even before the goods can be delivered for their business.
“You can only enjoy trust if you have a long-term relationship with someone. If you are a new company, it’s very difficult to have this trust from the start. This is a barrier to innovation for anyone trying to build a startup that can compete on a global scale,” explained Jiri Kobelka, the CEO of Tatum Blockchain API.
This means payments need to be made quickly before the good are even dispatched and the fact that Europe’s cheapest suppliers that can provide these SMEs a competitive edge are outside the EU such as Russia, Serbia, and Ukraine makes it all the more difficult. In its blog, Ripple notes that “paying these suppliers is an expensive process that takes anywhere between three and five days.”
Just-in-Time Payments to Boost Innovation
Despite having the benefits of free movement of capital, goods, and people, Europe has an innovation problem and stands well behind the US and China. Here, financial service providers can play a crucial role by “reducing the friction” that are basically slowing down the payments across the EU.
“Cross-border payments within the EU sometimes happen quickly but can also take up to 24 hours if the payment was initiated outside regular bank opening hours or if it’s going through a country with slower processes like Spain.”
As Kobelka further shares, faster and cheaper remittances could “shift Europe’s economy to the next level and open the market for opportunities in the international trade.”
Ripple has proven in its pilot testings that it can settle real-time payments while cutting down costs significantly through its XRP-powered xRapid.
As it concludes, this is the time for Europe’s banks and payment services to adopt a just-in-time payments process to become the preferred providers of the growing number of SMEs that want to have an impact at a global scale.