Despite the fact that the blockchain technology, which underpins bitcoin and other cryptocurrencies, have been well received by companies like IBM and Mastercard, as a way to more quickly move money around the world, not everyone recognizes it as a revolutionary system for payments.
Among them are, for example, a London-based startup TransferWise, which helps to money transfers between more than 70 countries and which currently does not see the benefits of using this technology.
– We have heard many times from different people that this is a technology dream. However, if you start digging into it, you will understand that it may look great on paper, but actually, it is very difficult to fully use. We considered various technology of the blockchain, but we haven’t found anything that allows us to do what we do that cheaper or faster, said co-founder and Chairman of TransferWise, Taavet Hinrikus in the podcast Fortune.
Part of the problem is that the technology of the blockchain has not yet reached sufficient acceptance among the banks, which can make it more efficient than the existing payment system. And as companies of financial technologies is constantly in need of new and less costly ways of transferring money, the need for widespread adoption of the technology of the blockchain is growing every day.
TransferWise may transfer money from Australia to the United States for 15 seconds, charging a fee in the amount of 1% or less while making the same transaction in the Bank it will take several days or even more, as explained Hinrikus. Moreover, in his own words, TransferWise has been profitable for two consecutive years, despite the low payment fees.
The company believes that if all financial institutions have used the technology of the blockchain from a Ripple, then most of them would be much easier to make remittances.
– If every Bank in the world used the Ripple network, that would be amazing. But how many banks actually using Ripple technology? Very few of them. In this sense, we are big supporters of Ripple and other such company … and if someone from them will receive a sufficient acceptance, and it’s actually financially will help us to make any services cheaper and faster, we would be happy to start using their technology, but until we found this decision — said Hinrikus.
His comment was a response to the comment by CEO of Western Union Hikmet Ersekë, who said in June that the company transfer money not to benefit from Ripple technology for a six-month testing period. Ripple recently began to cooperate with PNC Bank and Santander, who will now use their products, like xRapid or xCurrent, but the bulk of their banking clients are located in Asia.
TransferWise, for its part, managed to keep its costs low, offering its services exclusively online, refusing to overhead and using different technologies to optimize internal processes. However, its key innovation is the creation of its own payment network that allows to bypass the SWIFT system, which is used by most banks worldwide to transfer money between countries. Not having a need for such a mediator, TransferWise can directly transfer money between Bank accounts of their clients.
Is the only way by which we can make our services 10 times better than the options stated Hinrikus.
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