The new partners will enable Ripple’s xRapid payments solution to move between XRP and U.S. dollars, Mexican pesos, and Philippine pesos respectively. Ripple explained the operational principle like this:
“A financial institution (FI) that has an account with Bittrex would initiate a payment in U.S. dollars via xRapid, which instantly converts into XRP on Bittrex. The payment amount in XRP is settled over the XRP Ledger, then Bitso, through its Mexican peso liquidity pool, instantly converts the XRP into fiat, which is then settled into the destination bank account.”
XRapid is a liquidity solution for Ripple’s blockchain-based real-time gross settlement system, which is developed to facilitate international fiat transfers between financial institutions. Ripple Chief Market Strategist Cory Johnson said:
“We’ve seen several successful xRapid pilots already, and as we move the product from beta to production later this year, these exchange partners will allow us to provide financial institutions with the comfort and assurance that their payments will move seamlessly between different currencies.”
In May, financial institutions who participated in the pilot of xRapid platform, which tested payments between the U.S. and Mexico, reported transaction savings of 40-70 percent. Additionally, the participants noted an improvement in transaction speed from 2-3 days to “just over two minutes.”
Although the testing showed solid product performance, Ripple chief cryptographer David Schwartz claimed that banks are unlikely to deploy blockchain to process international payments, citing low scalability and privacy problems.