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Financial benefits yet to accrue from Western Union`s testing of XRP, CEO discloses

 

Barely six months ago, Western Union commenced the testing of XRP, a major product of Ripple for its money transfers. Credible reports on the partnership between Western Union and Ripple suggest the former is yet to record gains chalked as a direct result of this partnership.

 

This is perhaps contrary to the much touted pedigree of Ripple`s cryptocurrency XRP and its blockchain technology as being a relatively cheaper and faster means of transfering money internationally. The Western Union CEO, Hikmet Ersek recently intimated that no financial benefit had accrued to the company as a result of its testing of xRapid, a Ripple product that transfers money across foreign currencies through XRP for payment settlements.

 

 During an interview conducted by Fortune at the Economic Club of New York, Ersek is cited to have said: “We are always criticized that Western Union is not cost-efficient, blah blah blah, but we did not see that of the efficiency yet during our tests.”

 

Ersek added: the practical matter is it`s still too expensive.” Ersek further declared the intention of Western Union to keep the partnership with Ripple going only if its product XRP proves to be cost-saving in payment/transfer transactions, a feat it hasn`t chalked yet.

 

This doesn`t look good for Ripple, a company that has thus far succeeded in making its cryptocurrency, XRP the third most valuable digital currency on the market today, and worth $20 billion.

 

Ersek however admitted that six months into testing XRP may well be too early to make conclusive statements on it benefits, coupled with the fact that Western Union has thus far tested the XRP for money transfers between only two currencies, namely the US dollar and the Macican pesos.

 

Available records indicate that only 10 payments have been effected by Western Union using xRapid, obviously too few to begin to rack in substantial returns, Asheesh Birla, Ripple`s senior vice president of product has noted. Birla stated that, “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”. Birla further noted: They do millions of transactions a month, and I`m not surprised that with 10 transactions it didn`t have earth-shattering results.”

 

Birla revealed that Western Union could potentially cut down on its costs of transaction by a significant margin – 50% of cost per transaction only if Western Union would be willing to extend the test to cover all its payments. Birla also disclosed that when it comes to Western Union`s foreign exchange costs, some improvement, however little has been recorded, noting that they have “been on average better than what they normally see”.

 

In May this year, Ripple disclosed that pilots of its xRapid by a couple of companies, including Viamericas and Mercury FX resulted in a reduction in costs by 40 to 70%.

 

Ersek has said that Western Union has no plans to call off the pilot project until it runs its full course. “I don’t want to kill it,” Ersek said of the collaboration, describing the team from Ripple working with Western Union as “good people” and “very innovative.”

 

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