Democratizing Global Payments: xRapid’s Cost Savings and Benefits

At Ripple, we want to see digital assets used in a way that goes beyond making payments faster for businesses. We want to see the technology used to create a positive change in the world.

The Ripple mission of establishing an Internet of Value depends on the reaching two critical thresholds. The first is something we’ve highlighted consistently — that money can move like information, instantly. The critical second piece to the puzzle is that money can move at little to no cost.

While the economic potential for this vision has vast industry implications, it’s perhaps more important to evaluate its impact on the end user.

With this in mind, we’ve taken a look at the world’s remittance market and how specifically, our solution xRapid, if adopted on a global scale, could provide lasting impact for families around the world.

The global remittance market

Remittance payments are big business today: Total global payments are close to $600 billion annually. The fees associated with these payments total near $30 billion per year. Yet, the majority of them are small, according to the World Bank, averaging about $500 each.

Together with data about where these payments originate and end up, this data suggests that the majority of remittance payments are sent from individuals working abroad to loved ones in the developing world. These individuals are often working several jobs and their families back home depend on these funds to survive and grow.

Estimating new savings and benefits

The recent published results of xRapid pilots offer a critical takeaway: Financial institutions who use it save between 40-70 percent on traditional foreign exchange costs, a savings that can be passed down onto consumers — those sending remittance payments.

As more companies adopt this type of technology, we expect cost savings, along with a better payment experience, will be passed directly to the user. In economics, this is the idea of “perfect competition.” It means no one can company can control price, and ultimately, consumer benefits.

The $30 billion cost of global remittances, if reduced by a savings of 55% from xRapid, would lead to a global savings of $16.5 billion. To realize what this could do for a family in a developing country, we looked at the cost of living in the top 5 remittance destinations in the world: India, China, Philippines, Mexico and Pakistan.

We found the estimated $16.5 billion in savings could provide 3.27 billion meals (at an average cost of $4.13 per meal), 263.07 million monthly bills (at an average of $51.32 per month) and rent for 49.9 million people (at an average of $273.34).

These benefits illustrate just some of the ways in which lowering the cost of remittance payments could have major positive impacts on real people. They also help to realize a vision for the digital asset space that’s been around since creation of the first assets.

To learn more about Ripple’s vision to establish an Internet of Value visit our website.

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