I-Remit’s utilization of Ripple’s crypto solutions is a case study in using this new technology for good.
A couple of years ago, one of our tech writers at MANTLE wrote a short yet informative primer on blockchain and cryptocurrency. Even during the technology’s early stages, he wrote that “the more people understand [these advancements,] the more likely they’ll be used positively.”
Fast forward to 2022, and we’ve got an innumerable number of companies and businesses who are leveraging this new tech across various industries—most particularly within the remittance business.
Enterprises who deal with international payments have explored using cryptocurrency and blockchain technology to facilitate quick money transfers in real time, with all transactions saved on a decentralized and secure log.
This is precisely what I-Remit—the Philippines’ largest non-bank remittance service provider—has done in partnership with blockchain and crypto solutions company, Ripple. The company uses these new technologies to settle payments and exchange currencies across the globe in real-time.
But why and how would a remittance company utilize cryptocurrency to deliver their business?
The Business of Remittances
Simply put, when a person wants to send money to a beneficiary in another country, the sender must first pre-fund their bank account with the amount in their local currency or provide the money to a non-bank agent, such as over-the-counter remittance booths or money transfer systems. The sending party (whether a bank or remittance service) then informs their partner bank or agency in the receiving country to prepare the corresponding amount in the latter’s local currency. W
hile the receiving agent gets to provide the beneficiary with the money, taken from their own funds, within a few business days, they only get the money owed to them by the sending agent in a pre-agreed timeline.
But things get a little difficult when the sending agent doesn’t have any existing partnerships with the receiver’s bank or agent. In this case, the transaction goes through intermediary banks or agents, which slows down the transfer and adds fees for the increased labor. (In both direct and indirect transfers, fees are added to account for labor and fluctuations in exchange rate.)
This is where using blockchain and cryptocurrency come in: banks and agents may use the technology to settle transfers in real-time, for a much lower fee. Since the technology is “universal” in terms of access (thanks to its decentralized nature), it eliminates the need for several intermediaries to facilitate transactions.
And since the transactions are logged on the blockchain, it would be exceedingly difficult to tamper with the transfers. The logs are encrypted and constantly verified by peer-to-peer networks, so everyone gets to see and legitimize the transactions made on the blockchain.
Since 2018, I-Remit has used Ripple’s On-Demand Liquidity (ODL) solution, which utilizes XRP, a digital asset built for payments which bridges two fiat currencies.
So, instead of banks or agents pooling enough cash to pay their clients (and fund the receiving end), they can simply convert the money to XRP, send it in real-time, and allow the receiving party to convert it to their own currency.
And since I-Remit has experienced the convenience of using ODL for cross-border payments, the company has also decided to use the technology to conduct their treasury management. In simple terms, this refers to how I-Remit distributes and utilizes their working capital across their global offices.
By leveraging ODL, I-Remit is now able to get 24/7, all-year round access to liquid funds. The money is readily available for use in day-to-day operations.
“As one of the earliest adopters of Ripple’s ODL solution, we’ve been able to scale and accelerate our extensive payout capabilities in the Philippines. We’re excited for this next chapter of our well established partnership with Ripple to further utilize ODL for treasury management and provide the best possible service for our customers,” said Harris D. Jacildo, Chairman and President of I-Remit.
“Ripple’s strong business traction and continuous growth in ODL volume would not have been possible without partners like I-Remit looking to take advantage of blockchain and crypto technology to solve real-world problems. We’re excited at the expansion of our partnership with I-Remit to help bridge liquidity gaps so they can grow and scale other aspects of their business,” concluded Brooks Entwistle, Senior Vice President and Managing Director at Ripple.