What do Mexico, the Philippines and Sub-Saharan Africa have in common? They’re all notoriously difficult and expensive to send money into and out of.
This is the market that Ripple aims to crack with its suite of blockchain-based tools for cross-border payments. One of these services is called xRapid and it uses XRP—the third largest cryptocurrency by market cap—as means of exchange. With cryptocurrency, payment can happen much faster and much cheaper than using the traditional payment system. One company using the xRapid service is Mercury FX, and it’s already in use.
Mercury FX is a money remittance service based in London with offices in South Africa and Hong Kong. It processes $1 billion in transfers through its London office and $1.8 billion globally, according to its CEO, Alastair Constance. It has recently opened up payment channels for its customers to send money to Mexico and the Philippines using the xRapid service. In an interview with Decrypt, Constance delves into its plans to step up its use of xRapid and XRP.
“We are steaming ahead, to be honest, and we are looking for more jurisdictions and more flow to the jurisdictions we've already opened up,” he said, adding, “We are working very closely with [Mexico and the Philippines] on opening up new channels. We are very keen to move very fast but it's difficult when you're building a new network. ”
While Mexico has one of the biggest payment flows in the world, the country was a relatively small part of Mercury FX’s business before it started using xRapid. Constance explains that xRapid enables it to offer a cheaper service to Mexico, making the company more attractive to new clients.
“We are actively working with Ripple to market to expatriate Filipino and Mexican communities, but also to companies doing business in those channels,” Constance told Decrypt.
However, providing a complete money transfer service into countries such as Mexico comes with its own challenges. The two key ones, says Constance, are to do with capital controls and the crypto exchanges in the destination country.
Firstly, there are capital controls, regulations applying to the movement of money, including taxes on transfers. This means Mercury FX has to have a good awareness of the regulations in any country it is working in and ensure it stays within the rules.
Secondly, it’s not as simple as just making an xRapid payment to Mexico. The xRapid service swaps the initial currency into XRP that can then be sold for the currency used in the destination country—such as the Peso. But this requires an exchange in the destination country to make the swap. These tend to be cryptocurrency exchanges, which are known for lacking full KYC controls and tightly adhering to regulations. This means Mercury FX sticks to the exchanges recommended by Ripple.
Constance said the two payment channels they have already put in place are now being used regularly. He refused to give specific numbers due to non-disclosure agreements with Ripple, but said that the payments running on the xRapid channels to Mexico and the Philippines were in the tens of thousands of dollars, on a weekly basis. And his ambitions extend beyond that, as he hopes to attract more clients looking to send money into those countries.
“Once the pipe is open, there is no limit to how much one can put through it. We are actively marketing with Ripple, to try to invite those kinds of clients and, I think, with increasing success. It could be that we have serious amounts of luck and we end up doing hundreds of thousands, millions, tens of millions of dollars,” he told Decrypt.
While emerging markets are the main focus point for Mercury FX right now, Constance said he would like to bring xRapid transfers to its main customers in South Africa and Hong Kong in the future. He outlined that it would begin by presenting them with two options to transfer their fiat money—with the backend process being either a blockchain-based service or a normal service via SWIFT. This comparison would show the difference in transfer fees and time between the two services, allowing more intrepid customers to try out the new XRP-based service.
But until then, as more companies use xRapid and XRP to get money into Mexico—the country that's currently one of the slowest and most expensive to send money to is on route to getting cutting-edge services that will propel it into the fast lane.