American Express has partnered with the startup Ripple to introduce a payments platform that will transfer money from the U.S to England in just a few seconds.
American Express has partnered with American fintech startup, Ripple to introduce a payments platform that will transfer money from the U.S to England in just a few seconds. This process used to take as long as two days using Swift.
Faster, safer and cheaper
Ripple, which is headquartered in San Francisco, is a startup that strives to make transfers not just faster but also safer and cheaper. It does this using RippleNet, its blockchain technology. Blockchain is a public database of transactions that is maintained by a network of computers from all around the globe that is widely known as the technology that is behind Bitcoin.
American Express joins a growing number of global financial institutions that are already integrating Ripplenet into their technology especially for international money transfers. They include SEB, a Swedish bank which is already using Ripplenet to connect Europe and the U.S by connecting its Stockholm operations to New York. Others include Standard Chartered, Accenture Plc, Bank of America and Credit Agricole.
Partnership with Santander
The instant transfers by Amex are made possible through its partnership with the Spanish bank, Santander. Before this, Amex had to go through the banks where it would send Swift messaging to the banks requesting the payments. However, now Amex has a direct connection to the banks through Ripple’s cryptographic infrastructure which makes the transfer of value instant. This corridor is being run by Amex’s FXIP division.
The future of financial technology
The blockchain technology is being hailed as the future of financial transactions. It is set to transform a process that has for a long time been complex, slow and costly. It has other diverse applications including settlement of securities, in the voting process where it prevents voter fraud, record management system for hospitals and supplying financial aid to the impoverished.
The financial sector is the field where its applications have brought the most impact. It is set to reduce the cost of financial transactions by close to 60% and make the processes more efficient and transparent.
Adapting to new technology
Amex has distinguished itself as one of the companies that adopt new technology with ease to give its customers the best experience. It recently joined the blockchain community after it partnered with popular Bitcoin wallet, Abra to provide its customers with the opportunity to fund their Abra wallets through their credit cards. They can also instantly send payments and withdraw cash all over the world using Bitcoin to avoid the fluctuating exchange rates. This was the first partnership between a major credit card and a digital card.
The blockchain-based transfer platform is becoming very competitive. Swift, which remains Ripple’s biggest competitor, is already developing its own blockchain using Hyperledger to directly compete with Ripplenet. Other startups are also developing innovative uses of the blockchain technology and are fast becoming a threat to Ripple’s dominance.
The use of Ripple’s native digital currency, XRP, can however help Ripple maintain its dominance. This will no longer require its users to hold other currencies such as the U.S dollar or British pound and will instead result to XRP for liquidity purposes.