American Express has recently opened up what it calls a “payments corridor” using Ripple to enable money transfers from England to the U.S. in just a few seconds.
Made in partners with Spanish bank Santander, the corridor is being positioned by Ripple’s global head of strategic accounts, Marcus Treacher, as faster and safer way to send payments across the Atlantic. It relies on Ripple’s blockchain, RippleNet, to connect Amex customers using U.S. dollars to Santander bank accounts in the UK using British pounds. The integration routes non-card payments through the shared payment network for nearly instant, auditable cross-border payments.
“Whereas beforehand Amex had to send Swift messaging to the banks to request the payment to happen, now Amex is connected directly to the banks using Ripple and Ripple’s cryptography, so that the movement of value happens immediately,” a former Swift board member, Marcus Treacher told CoinDesk.
Ripple’s XRP cryptocurrency rises on the news
Unsurprisingly, using Ripple’s blockchain for transactions made its cryptocurrency (XRP) grow — it went up 7 percent on the day, as per CoinMarketCap. The spike in price did fade away, but there could are reasons to be optimistic about the cryptocurrency’s price going forward even though XRP itself is not being used in Amex’s corridor.
Ripple, the company, said it expects XRP to play more of a role in future partnerships. “It’s only a matter of time before central banks adopt blockchain to settle high-value, interbank fund transfers,” Ripple’s CEO Brad Garlinghouse told Bloomberg.
Not the first Ripple-enabled direct connection
Before Amex, Ripple has connected Europe and the U.S. via its work with Swedish bank SEB. That partnership produced a corridor between Stockholm and New York City which has already conducted $630 million-worth of transactions since launching into production in the second quarter of this year.
However, like the new Amex corridor, this one also doesn’t include the XRP cryptocurrency. It is, what Treacher calls, “a direct connection.” “There’s no intermediary cryptocurrency,” he added.
More connections coming soon…
It is only a matter of time before other banks embrace this sort of technology. One financial services firm, Cuallix, was first Ripple partner to convert cross-border fund transfers into the blockchain’s native XRP token.
Then there’s Swift, which has been “dealing” with interbank transfers for decades; it is building its own blockchain using Hyperledger.
However, Treacher thinks Ripple’s own token, XRP, will help the company in the long run.
“Where these two [Swift and Ripple] come together is that as banks and users of banks, like American Express, adopt Ripple and start to connect up, XRP becomes an option they can use for liquidity purposes,” he said. “And that’s where it really comes to life.”
Meanwhile, Amex is also looking to embrace blockchain for decentralized customer rewards programs. And for what it matters — like Swift — it too is a member of the Hyperledger Blockchain consortium.