Ripple wants to upgrade PH digital payments 

Ripple, a US financial technology company, wants to upgrade the outdated global payments infrastructure by replacing it with the blockchain ledger system that will enable Filipinos from around the world to send money faster and at less cost to their families in the Philippines.

“We believe that the current payments infrastructure –or plumbing—is broken, clogged and leaking. Global transactions today are supported by outdated, archaic systems that require days to settle payments and incur high transactional costs,” Singapore-based Ripple managing director for Southeast Asia Kelvin Lee says in an e-mail interview.

“The world was able to put a man on the moon and stream videos from space, yet we aren’t able to instantly send money across borders or perform a wire at a bank on Sunday. Recognizing this friction in payments, Ripple was established in 2012 to provide a solution to the outdated global payments infrastructure. Our vision is to enable the world to move money like information moves today—the Internet of Value,” says Lee, who had worked for Mastercard before joining Ripple in March 2020 to oversee its Southeast Asian expansion.

Lee explains that Ripple uses the blockchain technology to enable financial institutions to send money across borders, instantly, reliably and for fractions of a penny via its solution RippleNet. The network allows customers to enjoy faster, lower cost payments around the world, delivering a streamlined experience for global payments, he says.

One of Ripple’s customers in the Philippines is SendFriend, a money transfer company that leverages the blockchain to make remittance transactions less expensive, faster and more secure.

With offices in San Francisco, Washington D.C., New York, London, Mumbai, Singapore, Sao Paulo, Reykjavik and Dubai, Ripple has more than 300 customers across more than 45 countries, including American Express, MoneyGram, and Standard Chartered. 

Lee, who has a Bachelor of Science degree in Economics from Queen Mary University of London, says to solve the high cost of remittances because of trapped liquidity, RippleNet customers can choose to use on-demand liquidity using the digital asset XRP as a bridge currency. 

“An estimated $10 trillion is trapped around the world now, but this need for pre-funding in destination currencies is eliminated by using XRP, which dramatically lowers costs while enabling faster, real-time payments,” he says.

He says Ripple’s ODL product allows RippleNet customers to use XRP for sourcing liquidity in cross-border transactions instead of pre-funding. This ensures instant settlement, lower exchange fees and more efficient use of working capital in emerging markets like the Philippines. “Using ODL, our partner Azimo was able to reduce costs by 30 percent to 50 percent and hopes to pass along those cost-savings to their customers who are sending remittances to their families,” he says.

Lee says with RippleNet, Filipinos working overseas can send money to their families and loved ones at lower costs despite foreign exchange fluctuations. “Every cent counts especially now and it’s crucial that they enjoy faster and lower cost remittances 24/7, without having to pay high transactions fees or experience unfavorable exchange rates through traditional payment platforms,” he says.

This is possible through blockchain.  “Money transfers across the world are costly, slow and difficult to trace. From a customer perspective, they are paying extra fees for a slow service, and the amounts they are sending overseas are going under the grid. Using blockchain technology, Ripple allows financial institutions to process cross-border payments instantly, reliably, cost-effectively and with end-to-end visibility,” says Lee.

He says Ripple’s solutions can be particularly helpful in the Philippines.  “More than half of Ripple’s customers hail from the Asia Pacific region, and the Philippines stands out as an especially important market as one of the top remittance destinations globally, receiving $34 billion in 2018,” he says.

“Since I joined the Ripple team as managing director of Southeast Asia, I’ve helped to oversee our expansion across the region and the Philippines, and empower players in the remittance and money transfer market to join RippleNet,” says Lee.

Lee is optimistic about the growth of Ripple in the Philippines.   “We are optimistic about the future of digital payments in the Philippines. Since 2018, there has been increasing demand for e-payments in the Philippines, and this number is expected to increase globally by 15 percent in 2020 due to the global pandemic. More recently, we’ve seen a significant uptick in e-payments and online transactions, with InstaPay and PESONet transactions hitting P310 billion from March to May—up 54.4 percent from the previous quarter,” he says. 

The Philippines has also introduced a variety of smart wallets to help its unbanked population gain access to financial services, opening new remittance corridors to other countries in the region, he says.

“We expect this momentum to continue as the Bangko Sentral ng Pilipinas continuously pushes for increased e-payment transactions in the country via the National Retail Payment System, a framework for an interoperable system and ‘secure, efficient and affordable’ fund transfers,” says Lee. 

“With BSP Governor Benjamin Diokno predicting digital or e-payments will increase to 50 percent of all payment transactions and the government playing a significant role in promoting the adoption of digital payments, we believe BSP is on the right track in furthering industry growth while protecting the interest of consumers,” he says.