In a recent, fruitful podcast titled, Western Union in Asia Pacific & Trends in Fintech, hosted by Bernard Leong, Milly Shea, the General Manager of the Asia Pacific region at Western Union has finally confirmed that the company is piloting some settlement tests with Ripple fostering fund transfer between the US and Mexico. Somehow, the audience expected something positive out of the podcast. The objective according to the host was to discuss “business and distribution footprint of the company across the Asia Pacific.” After that, Molly Shea was supposed to give her two cents and general perspective “on the current trends in the fintech space” while divulging “how Western Union are experimenting with blockchain and cryptocurrency technologies.”
This positive comment is nothing new. It also comes a few weeks after the platform’s president Odilon Almeida comments were published in an article, Cryptocurrency Counter Argument, revealing that despite their wide support of fiat currencies, WU was ready to support cryptocurrency as an option for their customers. Like his predecessors, he went on to say Western Union is “better equipped to solve for such variables” and it has devoted “substantial resources to all of those three challenges of governance, compliance, and volatility.” All the same, he agrees that cryptocurrencies may be an asset that facilitates the exchange of value between people. Therefore, once it becomes mainstream, it will be ready to launch.
Why Western Union is Huge for xRapid
The Colorado-based company describes itself as “a global leader in cross-border, cross-currency money movement” that helps “people and businesses move money – to help grow economies and realize a better world” has been experimenting with Ripple solutions including XRP from February 2018. With 550,000+ Agent locations, presence in more than 200 countries, support of 130 global currencies and high throughput of 32 transactions per second, CEO Hikmet Ersek revelation in Q1 2018 earning call was received with jubilation and expectations.
Here is what he said:
“Well first, we have to differentiate between cryptocurrency and blockchain obviously. And then blockchain is definitely something interesting as an application, and which we may use it in several parts as I mentioned earlier is it a regulatory technology or digitally identifying or is it the settlement. And we with people do with ripple do some tests with some corridors on the settlement side. Is it a dollar to pesos on that side, can we use that on a real-time blockchain environment?”
Doubts and subsequent Clarification
Even so, the excitement fizzled out when six months later during an interview with Fortune at the Economic Club of New York, Ersek said xRapid—a Ripple solution which uses XRP as an on-demand liquidity currency, was “still too expensive” and would only adopt this solution if there is proof that it would cut down cost for the company. He kept on insisting that the Western Union system was so efficient and their replacement with “blockchain” wasn’t yielding any benefits.
However, that was still at the early stages of piloting, a fact that was countered and confirmed by Birla that Western Union had indeed done ten transactions. According to Birla, the XRP eliminated the need of parking capital through Nostro—vostro accounts which would otherwise be used in other activities. Here’s what Birla said:
“If they were to move volume at scale, then maybe you would see something, but with 10, it’s not surprising that they’re not seeing cost savings. They do millions of transactions a month, and I’m not surprised that with 10 transactions it didn’t have earth-shattering results.”
By opening up the USD—MXN corridor with facilitation done via XRP, it is increasingly becoming clear that xRapid incorporation is not only fast but cost saving. All that remains is a better clarification on the status of the coin, XRP, dispelling fears of eventual US SEC crackdown.