Since Western Union has begun testing Ripple XRP cryptocurrency for payments, company transfer money have yet to see a financial gain, says Director General of Western Union, Hikmet Ersek. He noted that the company will be interested only in adoption of XRP for payment if you find that it can reduce the cost. However, the failure to Ripple not yet proven: while WU had only 10 payments by xRapid, which is too small for tabulation of results.
– We always hear that Western Union is not cost effective, but we haven’t seen this performance during our tests [xRapid] said Ersek in an interview. It’s still too expensive.
This statement can mean a setback for the Ripple that turned XRP in a third currency of the stock market with a capitalization of more than $ 20 billion. However, Ersek warned that the pilot could be deployed too few to draw conclusions, because Western Union held 10 payments using xRapid and checked XRP in the translation only the two currencies, the US dollar and Mexican peso. According to Ashish Birla, senior Vice-President of Ripple on the product, this is too little to obtain meaningful results.
They perform millions of transactions a month, and I’m not surprised that with 10 transactions he didn’t have amazing results, ‘ he says.
Birla has also estimated that if Western Union will expand the pilot in all his payments, the firm will reduce at least 50% of the cost of the transaction. Moreover, the costs of Western Union for foreign currency has also been on the average better than that usually.
In addition to see more than net results of the pilot, according to Birla, the company would be worth to solve the issues with the fixed costs of ecosystem payments. Western Union is still burdened by the cost of the money transfer the traditional way, including maintaining personnel abroad, Treasury operations and other functions.
At the same time, the company Ripple announced last month that the pilots xRapid Viamericas and Mercury FX technology has lowered costs by 40-70%.
Ersek, for its part, does not exclude that blockchain technology can lead to lower costs for Western Union, noting that he’s currently the company is determined to continue cooperation with Ripple.
Experience Western Union reveals a serious obstacle that must be overcome to increase the spread of cryptocurrencies in existing institutions. The main task now is to prove that the blockchain is more efficient than traditional payment instruments. According to Ersekë, the system of payments in Western Union so effective that the replacement technology has not yet brought visible improvements.
Currently, to facilitate digital payments Western Union uses a 10 digit “money transfer control number money”, a code that corresponds to the individual payer or the recipient of Ersek compared with a private digital currency Western Union. The company first implemented it in the early 90-ies. In this sense, its own cryptocurrency have WU for 30 years.
Note, the pilot program was a positive signal for some cryptocurrency investors, who considered the tests of Western Union payments using Ripple as an advantage for digital assets XRP. However, most of the financial companies testing the blockchain, Ripple, decided to use the software product xCurrent, which operates without the use of XRP, not XRP-dependent product of xRapid. This preference has caused doubts in the viability of the cryptocurrency, which reduced the value of XRP to 50 cents, to 77%.
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