The U.S. Faster Payments Council (FPC) has acknowledged Ripple, along with Visa and Mastercard, as key players in the competition for dominance in digital asset currency conversion. This recognition comes as part of the FPC’s efforts to enhance the speed of real-time payments, with a specific focus on reducing settlement time from 2-3 days to instant.
The FPC has identified currency conversion as a significant challenge for both cross-border payments and digital assets. The process of converting one currency to another at an agreed exchange rate typically involves a third-party service. For cross-border payments, the foreign exchange component is a crucial aspect of the payment process, often involving correspondent banks, central banks’ settlement processes, and the parties initiating and receiving the payment.
Achieving immediate fund availability in cross-border payments is further complicated by manual operations and compliance requirements. Digital assets pose a different challenge, as the infrastructure must support not only the exchange of fiat currencies but also conversion rates between different cryptocurrencies.
The FPC has recognized distributed ledger technology (DLT) as a potential solution to improve transaction speed. It has also emphasized the importance of systems that support multi-currency settlements and real-time conversion rates for both cross-border and digital asset transactions. While cross-border payments and digital asset transactions share similar business functions, the mechanics of currency conversion may differ.
Key technological components for addressing these challenges include APIs for real-time exchange rates and payment tracking, artificial intelligence (AI) and machine learning for data analysis and risk management, as well as digital wallets and DLT for transaction and liquidity management.
In terms of digital asset conversion, the FPC envisions a trusted infrastructure similar to traditional sources like Bloomberg and Reuters providing FX rates for cross-border currency conversions. This infrastructure could potentially emerge on a DLT platform. The FPC has recognized Ripple as one of the companies capable of providing the necessary technology and platform for these conversions. It also stated that Ripple will compete with Visa and Mastercard for dominance in this market.
Ripple’s involvement in this space is likely due to its existing blockchain-based payment solutions, which facilitate fast and cost-effective cross-border transactions.
Please note that this article is for informational purposes only and should not be considered financial advice. The views expressed in this article are solely the author’s opinions and do not reflect the opinions of The Crypto Basic. Readers are advised to conduct thorough research before making any investment decisions, and The Crypto Basic is not responsible for any financial losses incurred.
