Ripple to compete with Visa and Mastercard for digital assets currency

Ripple has been recognized by the U.S. Faster Payments Council (FPC) as one of the companies comparable to Visa and Mastercard that are preparing to compete for dominance in the field of currency conversion for digital assets.

This acknowledgment was a part of the most recent insights from the FPC Work Groups that were investigating ways to improve the speed of real-time payments, with a particular focus on reducing the settlement time from two to three days to instant.

Recent developments in cross-border payment solutions and digital assets are examples of the kinds of things that are being done in an effort to realize real-time payments. Nevertheless, the FPC identified currency conversion as a significant challenge for international payments and digital assets.

Challenges presented by currency conversion

A third-party service is typically required in order to complete the process of currency exchange, which is the process of converting one currency into another at a rate that has been agreed upon.

When dealing with payments that are made across international borders, the foreign exchange component is an important part of the payment process. The parties that initiate and receive the payment, as well as a network of correspondent banks, are typically involved in this process. Additionally, settlement procedures within central banks are also involved.

Furthermore, the report highlighted the fact that achieving immediate fund availability in cross-border payments is further complicated by the fact that compliance requirements and manual operations are required.

The difficulty of converting currencies is only one aspect of the problem when it comes to digital assets. Not only it is necessary for the infrastructure to support the exchange of fiat currencies, but it is also necessary for it to support the conversion rates between various cryptocurrencies.

In the meantime, the FPC acknowledged distributed ledger technology (DLT) as a possible solution to enhance the speed of transactions. Furthermore, it was mentioned that it is essential for both international digital asset transactions and multi-currency settlements to have systems that are capable of providing real-time conversion rates and support multiple currencies.

In addition, the council acknowledged that although international payments and transactions involving digital assets share similar business functions, the mechanics of currency conversion may be different.

Application programming interfaces (APIs) for real-time exchange rates and payment tracking, artificial intelligence (AI), and machine learning for data analysis and risk management are fundamental technological components. Additionally, distributed ledger technology (DLT) and digital wallets will offer opportunities to manage transactions and liquidity.

When it comes to the conversion of digital assets, Ripple, Visa, and Mastercard are going to compete for dominance.

It is anticipated that the currency conversion of digital assets will follow the FX model; however, this would necessitate the existence of a reliable infrastructure.

To be more specific, the FPC proposed that, in the same way that traditional sources such as Bloomberg and Reuters offer foreign exchange rates for international currency conversions, a comparable infrastructure for digital asset conversions will emerge, possibly on distributed ledger technology (DLT).

As a result of this, the Faster Payments Council identified Ripple as one of the businesses that has the potential to make a significant contribution to the provision of the necessary technology and platform for these conversions. In addition, it was stated that Ripple will compete with Visa and Mastercard for the position of market leader in this sector.

Ripple's involvement is likely to be due to the fact that it already has blockchain-based payment solutions in place, which make it possible to conduct international transactions in a quick and cost-effective manner.

Future implications

As the financial sector continues to evolve, the role of Ripple in digital asset currency conversion will likely grow more significant.

The potential implications include increased competition in the payments industry, new opportunities for financial institutions, and transformative changes to cross-border transactions and digital asset trading.