ChinaBank, a Filipino banking firm, has partnered with Qatar National Bank (QNB) to enable direct transfers from Qatar to the Philippines using RippleNet payment solution. The collaboration aims to provide improved financial services to Filipinos who work overseas, especially after the Covid-19 pandemic.
By using Ripple’s On-Demand Liquidity (ODL) payment solution, both banks can enable instant settlements using XRP, which eliminates the need for conventional correspondent banking relationships and the associated costs and delays. The collaboration between ChinaBank and QNB highlights the increasing popularity of blockchain-based solutions in the international remittance sector.
ODL Payment Solution: What is it and How it Works
Ripple’s ODL payment solution uses digital assets such as
XRP to enable real-time cross-border payments. The payment solution functions by first converting one currency into XRP and then converting the XRP into the desired currency. This method eliminates the need for conventional correspondent banking relationships and reduces the associated costs and delays. Compared to traditional cross-border payment methods, ODL is a fast, efficient, and affordable option.
Ripple’s ODL has been launched across several countries to improve payment transactions. The payment platform expanded its services in Japan in 2021, hoping to accelerate the adoption of the popular tech. Similarly, Ripple announced the expansion of its ODL services to Europe, particularly France and Sweden. LemonWay, a payment service for online marketplaces based in France, will leverage RippleNet’s ODL to improve its payment process by using XRP. Additionally, Swedish money transfer provider Xbaht will use ODL to provide instant and low-cost retail remittances.
Blockchain-based Solutions in the International Remittance Sector
The collaboration between ChinaBank and QNB in utilizing Ripple’s ODL highlights the increasing popularity of blockchain-based solutions in the international remittance sector. Remittances are a significant source of income for many countries, particularly developing countries. The World Bank reported that remittance flows to low- and middle-income countries (LMICs) reached a record high of $540 billion in 2020, despite the economic fallout from the Covid-19 pandemic. The report also showed that the average cost of sending $200 remained high, at around 6.5% in the fourth quarter of 2020. Blockchain-based solutions, such as ODL, have the potential to lower the costs of remittances and improve their efficiency.
The Future of Remittances: Blockchain-based Solutions
Blockchain-based solutions are rapidly gaining popularity in the international remittance sector due to their potential to reduce costs and improve efficiency. Blockchain technology can provide a secure and transparent platform for financial transactions, eliminating intermediaries and reducing associated costs.
The use of digital assets, such as XRP, enables fast and affordable cross-border payments, eliminating the need for traditional correspondent banking relationships. The rise of blockchain-based solutions in the international remittance sector is expected to continue, with more banks and financial institutions partnering with blockchain-based payment providers to improve their remittance services.
Conclusion
The collaboration between ChinaBank and QNB, utilizing Ripple’s ODL payment solution, highlights the increasing popularity of blockchain-based solutions in the international remittance sector.
Remittances are a significant source of income for many countries, particularly developing countries, and blockchain-based solutions have the potential to reduce costs and improve efficiency. The use of digital assets such as XRP enables fast and affordable cross-border payments, eliminating the need for traditional correspondent banking relationships.
