Ripple claims a big win in the elusive quest to use cryptocurrency in banking

February 26, 2020, 1:59 PM UTC

For years, Ripple has tried to make the case that its cryptocurrency network offers a faster and cheaper way to move money around the world than traditional financial institutions. But despite trials with big banks and Western Union, skeptics question when, if ever, Ripple’s service will ever catch on.

Now, though, Ripple—which owns a hoard of XRP, the third most valuable cryptocurrency—may finally be making headway on its goal. On Wednesday, it announced a tie-up with Azimo, one of Europe’s biggest money transfer services, and that Ripple recently used XRP to move $24 million between the U.S. and Mexico in a single week.

The news helps support Ripple’s argument that XRP is useful as a “bridge currency,” helping financial institutions free up capital that would otherwise be tied up as reserves to facilitate international transfers.

In an interview with Fortune, Azimo CEO Richard Ambrose said using Ripple’s XRP product, known as On-Demand Liquidity, has saved the company 30% to 50% when arranging currency transfers between customers in the Philippines and those in the UK and Europe.

Ambrose described the process as a “fast and efficient bridge between remittance markets.”

Skeptics, however, can point to earlier partnerships that began with companies touting the promise of XRP, only to abandon it months later. The most conspicuous of these was Ripple’s short-lived partnership with Western Union, whose CEO in 2018 publicly stated that using XRP hadn’t reduced his company’s cost.

The failure of that partnership may explain Ripple’s decision to buy a 10% stake in struggling MoneyGram. The investment has resulted in MoneyGram using XRP for some of its operations. But in the last half of 2019, MoneyGram received over $11 million from Ripple—raising questions about whether partners are using Ripple because they are being paid to do so.

Ambrose, of Azimo, says his company will be paid by Ripple, but that the money is to offset the technology investments it must make for its infrastructure. Ambrose added that the payments are small compared to the cost savings Azimo will reap from using Ripple, which he said is often misunderstood.

“Ripple is like those blind men describing an elephant, who all describe it differently depending on where they stand,” he said. “For some, it’s a speculative cryptocurrency, for some it’s an enterprise blockchain, and others it’s a financial messaging solution.”

Ambrose added that, for his company, Ripple and XRP are a means to lower costs when arranging money transfers to countries like the Philippines and Nigeria.

Asheesh Birla, the senior vice president of product at Ripple, pointed to the $24 million in transfers between the U.S. and Mexico, saying it accounted for over 3% of overall remittances between the two countries that week. The increased volume, added, has also attracted market makers in XRP, which in turn drives further demand for the cryptocurrency.

Meanwhile, Ripple CEO Brad Garlinghouse recently told CNN that he aspires to make Ripple the “Amazon of crypto,” explaining that the retail giant began with books but then used its distribution network to add other products as well. He did not provide further details, but Birla stated that some of those new products will roll out next year.

All of this may not be enough to quell Ripple’s critics, who say the company is drumming up unnecessary uses for XRP so that it can sell its own reserves of the cryptocurrency. But for now at least, it appears Ripple has momentum on its side.

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