Ripple Launches New ODL Corridors
Ripple has released a new On-Demand Liquidity (ODL) system for cross-border payments. According to reports from the company, the new ODL system is to address the bottlenecks that are inherent on the payment gateways provided by modern banks with respect to cross-border payments. In its reports, Ripple had listed the faults Small and Medium Enterprises (SMEs) encounter when trying to conduct cross-border transactions. The report stated that most SMEs depend heavily on international payments, however, a large percentage have complained that these payments are fraught with issues. Thus, the newly released ODL will serve as a respite to SMEs.
Furthermore, Ripple’s report stated that over the past few years, the sector of international Business-to-Business (B2B) transactions have experienced a massive spike. The spike has been really noticeable following the emergence of new markets. However, the further growth of the industry is being plagued by the unavailable conventional financial services. According to the same report, the industry is projected to expand by 7% from now to 2022. Despite this, the report predicts that the growth will be unequally distributed- that is, countries within the Latin American and Asian-Pacific regions will experience more of the increase than those within the regions of Europe, the Middle East, Africa (EMEA) owing to the bottlenecks mentioned in the report.
Ripple’s ODL to Address Bottlenecks in Current Banking System
With the events of 2020, especially the pandemic, most companies and individuals are now working remotely or some of these jobs are outsourced to workers in another country. Moreover, a lot of people have had to make online purchases for food and other necessities since they now spend more time at home. Thus, the need for fast and reliable online payments has increased more than ever before. More importantly, SMEs are really dependent on international payments to enable them to broaden their business base and engage with prospective clients. Another problem they faced was going through many middlemen just to connect to their clients in other continents. All of these issues affect their businesses deeply such that scalability becomes a problem too.
Ripple’s Partners Already Implementing the System
The report listed out all other issues that SMEs face, some of which are: limited visibility into the total costs and duration of payments; no traceability when the payment will actually arrive; settlements delayed by transfers through correspondent banks; unaffordable foreign exchange spreads and fees. The costs SMEs incur in facilitating cross-border payments is really on the high side according to the report– transactions take 2-5 days to complete, payment error rate stands at 4%-6%, transaction fees ranging from $30 to over $100. Interestingly, the ODL system is directed at resolving all of these issues using the Ripple network.
The ODL payment system has only been implemented in Brazil and the United Kingdom (UK) by partners of the company to facilitate quick and affordable payments across borders and countries such as Germany, Spain, Italy. This new development comes on the heels of the legal battley going on between the United States Securities and Exchange Commission.
Tokenhell produces content exposure for over 5,000 crypto companies and you can be one of them too! Contact at info@tokenhell.com if you have any questions. Cryptocurrencies are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by Tokenhell authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content or banners (ad space) posted on the site. Read full terms and conditions / disclaimer.
