Ripple CTO cites the utility of cross-border payments to Mexico with XRP and how it has transformed the traditional remittance landscape.
David Schwartz, the Chief Technology Officer (CTO) of Ripple, recently demonstrated the practical uses of XRP for cross-border payments in a video shared by the pseudonymous researcher XRP Daily (@XRPXLMVERSE).
In his example, Schwartz illustrated how XRP can revolutionize remittance payments from the United States to Mexico.
Traditionally, sending money involves multiple intermediaries, long processing times, and high fees.
By using XRP, however, the process becomes much more efficient.
A customer in the U.S. can buy XRP on a local exchange, transfer it through the XRP Ledger to a Mexican exchange, and convert it into Mexican pesos.
This entire transaction can be completed in about 60 to 80 seconds, significantly cutting down both time and costs.
One of the key advantages of XRP is that it provides a payment corridor that operates continuously, unaffected by traditional banking hours or holidays.
This ensures that transfers can occur at any time, offering users great flexibility.
While digital assets are often criticized for their volatility, Schwartz noted that the short holding period of XRP—usually no longer than 80 seconds—helps mitigate this risk.
He explained, “When you compare the volatility of XRP over 80 seconds to holding Mexican pesos over a weekend, XRP doesn’t experience the same level of volatility in such a short timeframe.”
This rapid transaction capability makes XRP an attractive option for remittances, and it is already utilized by companies like SBI Holdings for this purpose.
Another major advantage of using XRP is the reduction in the need for pre-funding.
Traditional cross-border payments often require institutions to keep reserves of various currencies in different locations, which can inefficiently tie up capital.
Schwartz pointed out that with XRP, financial institutions can maintain their funds in a single currency, such as U.S. dollars, and convert them to the necessary foreign currency on demand.
“You can have them in less than a minute, anytime, day or night, even on holidays,” he said.
This flexibility not only reduces costs but also improves liquidity management for businesses.
Additionally, Ripple’s approach goes beyond merely facilitating payments.
By incorporating XRP into their systems, institutions can access a range of decentralized finance (DeFi) products and services, including lending solutions and real-world asset tokenization, poised to comply with future regulatory standards.
Schwartz described this as a “distribution channel for enterprise DeFi.”
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