As more institutions in the MENA region look to adopt a crypto strategy, demand in the region is rising for more crypto-enabled cross-border remittance services, according to a top official at Ripple, the global enterprise blockchain and crypto solutions firm.
“We have seen a great deal of interest from institutions across MENA to use On-Demand Liquidity (ODL) to underpin the remittance services they offer, and we already have local payments service providers such as Pyypl using the solution to facilitate remittances between the UAE and other countries around the world,” Navin Gupta, Managing Director, South Asia and MENA, Ripple, told Zawya.
“Our clients and partners in the region are making use of our ODL crypto solution to facilitate cross-border payments as MENA continues to be a growing region for remittances. We expect to further expand our presence in the region as our business grows there,” he added.
Through Ripple’s payments network RippleNet, its customers can leverage the digital asset (XRP) for cross-border payments directly through a crypto wallet, allowing lower-cost transactions and instant settlement. XRP is a cryptocurrency and the native token of Ripple
Ripple’s cross-border payments technology is used by enterprises, and its clients are primarily banks, payments services providers and other fintechs. The overall payment volume on its payments network RippleNet exceeds $15 billion, and its global ODL volume has grown ninefold year-on-year.
“We have seen a lot of interest in our services in MENA. We have partnerships with several leading banks in the region, including with SABB in Saudi Arabia and QNB in Qatar. We are also working with local payments service providers such as Pyypl and LuLu Money, which are using Ripple’s [ODL] crypto solution to facilitate global movements between different currencies,” Gupta said.
Despite technological advances, he said, cross-border payments remain a challenge for payments service providers and small and medium-sized enterprises (SMEs), who are left prefunding accounts and holding trapped capital that could be better deployed to help grow and scale their business.
By harnessing crypto liquidity, he added, Ripple can bring new products to market that aren’t possible with legacy systems.
ODL allows both companies’ treasury managers to obtain the foreign currency liquidity they need, freeing up working capital and avoiding the need to pre-fund nostro accounts based on projected volumes.
ODL is now available in nearly 40 payout markets, representing approximately 90% of the daily $6 trillion FX market, which Gupta described as a significant milestone toward global coverage.
“Instead of replicating what’s happening in the physical world and making it digital, we’re offering customers a completely new way to do business. This gives more flexibility and choice to customers while reducing payment flow friction. It also gives our customers the ability to grow and scale quickly with new partners and currencies, by simplifying the onboarding process and enabling payouts through multiple currencies,” Gupta said.
UAE as Crypto Hub
Gupta noted that it was not so long ago that crypto had negative connotations and many traditional financial institutions were extremely hesitant to discuss it, let alone integrate into their products, but in more recent times, his firm has seen traditional financial institutions become more comfortable with the idea of adopting crypto to solve real problems for their business when it comes to remittances and treasury payments.
“While traditional financial institutions have been slower to adopt, MENA is certainly seeing an increase in new services and adoption in the region by both consumers and enterprises,” he added.
Gupta noted that the UAE is now home to many influential crypto companies, creating an opportunity for the developer ecosystem to thrive. “A number of these developers are choosing to build on the XRP Ledger (XRPL). Developers can apply for a grant from the XRPL Foundation and/or Ripple to build solutions relevant to the MENA market.”
Additionally, he added, NYU Abu Dhabi is a University Blockchain Research Initiative (UBRI) partner, and Ripple has been working with the institution on a cluster of startups to activate the ecosystem in the region.
Future of Global Payments
Ripple is engaging with policy makers and regulators across the MENA region as they look to develop frameworks to support digital assets.
“We are seeing increasing interest from regulators in the MENA region on providing clarity around the nature of digital assets as well as clear regulatory frameworks to support digital asset activities, including payments,” Gupta said.
He added that innovation in the space will be driven by a regulatory environment that is welcoming to crypto and technological advancements and understands that it is the future of global payments.
(Reporting by Sunil S; editing by Seban Scaria)