The Paypers met Nilesh Dusane from Ripple at the Money2020 event in Las Vegas and discussed about financial institutions and how to settle cross-currency payments efficiently.
What are the sweetspot use cases for Ripple, i.e. which problem does Ripple solve and for whom? What problems can now be solved that could not be solved before with ‘old technology’?
Ripple provides financial infrastructure solutions that make it faster and cheaper for banks to settle transactions globally. These cross-border payments are the lifeblood of international commerce and make up USD 22.5 trillion in annual volume, but they are conducted on outdated technology. This antiquated infrastructure has created four crucial roadblocks:
• Access is restricted with fewer than 10 banks globally providing liquidity for cross-border transactions;• Payments are slow, taking 2-4 days to settle;• Total payment costs are uncertain because there is no two-way communication in a transaction, and it’s impossible to confirm a successful payment delivery;• Transactions are expensive with an estimated USD 1.6 trillion in costs across the ecosystem, plus lost revenue opportunities due to pre-funding requirements.
Ripple is a bank-grade infrastructure technology that lowers the cost of every transaction by enabling banks to settle instantly and directly with one another with complete visibility and control of each transaction. These capabilities are not possible in todays payments ecosystem.
What role will Ripple play in the ‘instant payment’ movement globally, and in Europe in particular?
Ripple will be a key technology helping to power the worlds instant payment network. This system of instant global payments will be part of what we call the Internet of Value, a fast-forming reality in which value can be exchanged as easily as information moves today. We believe Ripple will be a preferred cross-currency settlement technology used by the world’s banks.
What is the relationship with Ripple and traditional ACHs (Automatic Clearing Houses) and SWIFT (Society for Worldwide Interbank Financial Telecommunication)?
The entire world is pursuing a faster payments capability, and we are having productive conversations with most of the leaders in the space. We believe that in the short term, cross-currency settlement is the sweet spot for distributed financial technologies, meaning that by connecting a US and European bank on Ripple, we effectively bridge the ACH and SEPA systems, making them more interoperable with one another. Ripple is also fully compatible with SWIFT, and we believe there is great potential for collaboration to make payments even faster, cheaper, and more interoperable.
How is Ripple currently perceived from a central banking perspective?
Like many financial institutions around the world, central banks are curious and exploring innovative ways to make faster payments. A good example of this is the U.S. Federal Reserves Faster Payments Steering Committee, of which we are members, and was formed to better identify opportunities for implementing faster payments across the US. We are excited to help inform more efficient and more interoperable payments systems, and in the meantime we are focused on expanding adoption of Ripple for cross-currency settlement with organizations like Accenture and CGI.
I understand that Seagate is one of your shareholders. Can you elaborate on their motivation and what Ripple could mean for corporates in general?
Global corporations face the same challenges with cross-border payments, often having to tie up excessive amounts of money in pre-funded, local currency accounts to facilitate transactions. Banks are eager to explore options like Ripple that can help eliminate this friction and save their corporate customers time and money.
Ripple has a native currency called XRP. It is primarily used as a means to make attacks on the network exorbitantly expensive. It is also traded on different cryptocurrency exchanges. Given the integration with Earthport in a more closed and institutionalized network what is the future use of XRP in the Ripple network?
XRP is a digital asset used both to prevent denial-of-service attacks and as a bridge between fiat currencies. Based on extensive customer feedback over the past two years, we learned that banks want the flexibility to pay transaction fees in any local currency, including XRP. We developed the Interledger Protocol (ILP) to allow banks this flexibility and we are working to make Ripple ILP-enabled.
Considering Ripple’s rapid expansion, what new use cases do you see for Ripple in the future and what will these look like?
We are focused today on Ripple’s ability to address the challenges of cross border payments. We feel that Ripple is perfectly suited to bring needed access, speed, savings, and certainty to this sector. In addition, the introduction of the ILP will give us the ability to interconnect ledgers of any kind - be they bank ledgers, PayPal ledgers, or M-Pesa ledgers. Ultimately, we believe interconnectivity of the worlds payment systems will be a key part of building the broader Internet of Value.
About Nilesh Dusane
Nilesh is VP of Global Sales and Client Relations at Ripple. He brings 18 years of financial services and information technology experience to his role. Prior to joining Ripple, Nilesh has held various leadership roles in business development, professional services, and engineering in the payments industry.
About Ripple
Ripple provides global financial settlement solutions to ultimately enable the world to exchange value like it already exchanges information – giving rise to an Internet of Value (IoV). Ripple solutions lower the total cost of settlement by enabling banks to transact directly, without correspondent banks, and with real-time certainty of settlement.
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