The quest for faster and more efficient payment processing drives innovation across the financial landscape. The U.S. Faster Payments Council (FPC) recently released insights highlighting the challenges and potential solutions for achieving real-time cross-border payments and digital asset transactions.
A key hurdle identified by the FPC is currency conversion, which can significantly slow down transactions due to traditional settlement times and complex infrastructure.
Read Also: U.S. Faster Payment Council Points Up Ripple and XRP’s Cross-Border Payment Capacity
The FPC’s report emphasizes the need for real-time currency conversion capabilities to support cross-border payments and digital asset transactions. Currently, cross-border payments often rely on a network of correspondent banks and central bank settlements, leading to delays of 2-3 days.
Similarly, converting between digital assets requires infrastructure that manages fiat currency exchange and cryptocurrency conversion rates.
The report identifies distributed ledger technology (DLT) as a promising avenue for overcoming these hurdles. DLT offers the potential for faster transaction processing and secure record-keeping. Additionally, the FPC highlights the importance of multi-currency settlements and real-time conversion rates for cross-border payments and digital asset transactions.
Notably, the council acknowledges that while there are similarities in the business functions of cross-border payments and digital asset transactions, the mechanics of currency conversion may differ.
To achieve real-time conversion, the FPC suggests several key technological components. These include:
APIs for real-time exchange rates and payment tracking: These interfaces will provide instant access to exchange rates and transaction information, enabling faster decision-making and settlement.
Artificial intelligence (AI) and machine learning: AI and machine learning can analyze vast amounts of data to identify trends, optimize conversion rates, and manage risk.
Digital wallets and DLT: These technologies offer secure platforms for managing digital assets, facilitating transactions, and ensuring liquidity.
The FPC acknowledges the established role of traditional financial institutions like Visa and Mastercard in facilitating cross-border payments. However, the report also identifies Ripple as a company with the potential to be a significant player in the digital asset conversion ecosystem.
Ripple’s existing blockchain-based payment solutions, designed for speed and cost-effectiveness in cross-border transactions, position them well for involvement in digital asset conversion. The FPC suggests that Ripple could rival established players like Visa and Mastercard for dominance in this emerging market.
Read Also: This Binance Announcement Affects XRP Traders
The future of digital asset conversion is likely to draw inspiration from the established foreign exchange (FX) model. Similar to how trusted sources like Bloomberg and Reuters provide FX rates for traditional cross-border transactions, the FPC envisions a similar infrastructure emerging for digital asset conversion, potentially built on DLT.
The FPC’s recognition of Ripple underscores the potential for innovative companies to disrupt the financial services landscape and drive the adoption of digital assets.
Follow us on Twitter, Facebook, Telegram, and Google News
Recently, the Tron (TRX) ecosystem has been a playground for meme coins, attracting investors with…
2024 continues to unfold as a transformative year for the cryptocurrency market, notable projects like…
The blockchain industry is experiencing rapid growth, but it’s also facing significant challenges as projects…
September is shaping up as a big month for the crypto market, with TRON’s revenue…
As September rolls out, the crypto market is hoping for much needed price recoveries, especially…
Shiba Inu (SHIB) enthusiasts have long held ambitious hopes for the token’s price to reach…