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TransferWise: We Won’t Use Blockchain until More Banks Use Ripple

Last Updated October 6, 2020 8:28 AM
David Hundeyin
Last Updated October 6, 2020 8:28 AM

Major money transfer service TransferWise has indicated that in spite of excitement over the growth of Ripple’s global payment solution, it has not seen a compelling case for using blockchain technology to carry out its business — yet. Speaking to Fortune  recently, TransferWise chairman and co-founder Taavet Hinrikus stated that while there exists a lot of excitement over the possibilities created by the blockchain, its operational realities present a new set of challenges on their own.

Excitement Versus Reality

Speaking on a new episode of Fortune’s “Balancing the Ledger,” Hinrikus stated that London-based TransferWise, which currently conducts money transfers among more than 70 countries, supports the idea of blockchain-based transfers in principle, but that right now they are trickier to handle than the existing framework. As a result, the firm, which undercuts SWIFT by processing cross-border transactions at high speed for as little as 1.5 percent commission, sees little benefit in adopting blockchain technology in the near-term.

Explaining why this is, he said:

“We’ve heard this dream many times from different people. However if you start digging into it, you realize that it may look great on paper, but in reality, to make use of it, it’s really hard. We’ve looked at different blockchain technologies, but yet we haven’t found anything which enables us to do what we do in a way that is cheaper or faster.”

In part as a result of fintech companies increasingly finding new ways to sidestep the expensive SWIFT network, blockchain transfers are becoming less competitive compared to other emerging alternatives. Fintech companies that consider implementing blockchain frameworks now require more and more significant upsides to make the switch worthwhile, he said.

Not Impressed by Ripple’s Current Partner Network

ripple blockchain
Source: Shutterstock

According to Hinrikus, TransferWise has examined Ripple’s high-speed, cross-border payment solution, RippleNet, and has found no compelling reason to use it given its current level of adoption.

Explaining why this is, he remarked:

“If every bank in the world was going through the Ripple network, it would be amazing. Yet how many banks are using Ripple today in production? It’s a very short list. In that sense we’re big supporters of Ripple or anything else…and if any of these gets enough adoption, and it actually materially helps us do things cheaper and faster, we’d love to, but so far we haven’t found one.”

In June, CCN.com reported that Western Union CEO Hikmet Ersek expressed a distinct lack of enthusiasm over a potential switch to Ripple after the company carried out an XRP trial run. Ersek stated at the time that the results of the trial did not show any real cost savings that would warrant overhauling the existing system to use XRP for cross-border payment settlement.

Featured Image from TechCrunch/Flickr